GM to give customers what THEY want??

[mchastek]

What a novel idea! GM's Mark LaNeve wants to focus on the customer, not on GM's execs. Sourced from the Chicago Tribune (http://www.chicagotribune.com/business/chi-0505080261may08,1,5310412.story?coll=chi-business-hed&ctrack=1&cset=true):


WHAT'S GOOD FOR GM, ITS WORKERS, DEALERS, RETIREES, BONDS?
Cadillac kid: `Gotta compete'

Marketing czar wants to give customers what they want, not what committees of executives say they want

By Michael Oneal and Jim Mateja
Tribune staff reporters
Published May 8, 2005

For a 46-year-old carrying a significant slice of the U.S. economy on his shoulders, Mark LaNeve seemed remarkably upbeat last week as he bent his stocky, 6-foot frame into the cabin of a Citation business jet sitting on the tarmac near Midway Airport.

Reaching into a black leather briefcase stuffed with documents, the newly appointed North American marketing czar of General Motors Corp. pulled out a set of colorful PowerPoint slides.

They contained a sketch of his plan to help extract the ailing automaker from the sudden maelstrom that has gripped the company and its 145,000 employees around the U.S.

"This is it," he said, flipping through the pages. "This is the stuff we've been talking about."

What LaNeve is talking about might sound like Marketing 101. GM will sharpen its brands and get rid of me-too models. It will cut incentives and focus on value. It will hammer home that its quality is much better than people think.

In short, GM will try to give customers what they want, instead of what committees of executives in Detroit think they want.
....

[Paul12801]

I'll beleve it when I see it. GM's word cannot be trusted, although it is about time GM starts to come into the 21st centaury. Wake up GM, Ford, and Chrysler!

[Maxwedge]

why do you mention Chrysler? what havent they been doing? They are the only former domestic that is profitable.

[futureoftheunion]

Problem is those North American profits have gone for years now to overseas investments.

[Mr. Pebble]

GM has been talking a lot of talk for way too many years. Trouble is, they don't walk the walk. How many times in the last few years have they issued puffy press releases even when they have had another disaster. We will see a recovered GM when they fall silent and start showing something. Won't happen. So far, a good day at GM is when they try to shoot themselves in the foot and don't miss.

Also, did you notice that over 97% of GM stock is held by insiders and institutions?

Mr. Pebble

[DMD]

I think its funny that people say GM is or has not been offering cars people have wanted. The reason why I think that's funny is because like it or not, GM has been giving the people what they've wanted. If they didn't do that they wouldn't have been the #1 manufacturer of cars worldwide for the last 74 years.

[mchastek]

I think its funny that people say GM is or has not been offering cars people have wanted. The reason why I think that's funny is because like it or not, GM has been giving the people what they've wanted. If they didn't do that they wouldn't have been the #1 manufacturer of cars worldwide for the last 74 years.

Maybe 74 years ago they gave people what they wanted, but I don't believe it anymore, for the most part. Since the imports have joined in the fun, they're leaps and bounds ahead of almost every GM product I can think of.

Competition is wonderful for consumers. The imports saw the US market and realized there was a lot of opportunity to make better vehicles, and they did.

I'd be curious to hear which vehicles you think GM currently offers that consumers truly want... and would honestly buy if it weren't for the ridiculous incentives required to make them sell. The Corvette is the only one that comes to my mind. Maybe the Escalade. That's about it. Just my opinion :)

[Mr. Pebble]

I agree. With the high capital requirements in the auto industry, the weak partners die out every time there is a recession until there are only a few left, ultimately three. What really hurt was that Americans had to have their "personal transportation" which made the demand for cars very inelastic. When they came to the cost crossroads, it was easiest to keep raising the price and ignore quality but where could the consumer go, three companies offering overpriced junk built by overpaid workers moving in slow motion and pretending to have the same entitlement that executives were pretending to have. The Japanese must have been drooling when they hit the Left Coast and wiped out half the market in a few years with cars that worked.

I have been doing some research this week and today sent the following email to various media outlets. Rather than repeat it, I will cut and paste it below.

Just doing some research on insider trading of GM stock. Those insiders are really larding it up at the regular stockholders expense. Some get free shares and sell off a nice portion the same day. Others exercise options and sell enough to get their money back and keep the rest. Many make more in the one transaction than the average person makes in a year and they are probably only paying a small tax on it.

And also note that there is a correlation between the health of a company and the amount of stock held by institutions. Healthy companies have a very low institutional percentage which means that the rich own the stock. Those heading for the junk heap have a high percentage of institutional shareholders which means that the institutions are quietly investing peoples 401k money in losers to prop up the stock price for a while.

Note that GM is over 98% owned by insiders and institutions and also has over 10% in short sales which is huge and represents the opinion that the stock is going to tank. Their Enterprise Value and Free Cash Flow are about as sick as a corporation can get. Let's wait for the Q3 numbers to show up a week Monday and see how pitiful GM's balance sheet looks.

FYI

Go look up the above figures and you will see what I mean. Nobody believes GM's puff any more, the excuses for failure have become laughers as they play musical chairs with executives who couldn't find a competent decision if it were nailed to a 2x4 and they were smacked between the eyes with it.

I did my darndest to get Toyota to come to Lansing and buy up the GM facilities, five assembly plants, two stamping plants, one distribution warehouse, and a slew of incompetent and mostly bankrupt suppliers, many sitting on toxic waste sites which is why they are not abandoned, creating cleanup liability.

Toyota could produce vehicles in Lansing for $1,000 per unit cheaper than anywhere else in the U.S. or Canada but they did not answer my letter and our community, desperately in need of jobs and cash sinks in tandem with GM, attaching their star to the coming black hole.

We have a practice in Michigan - we chase out a few thousand jobs and then the our (one term) Governor Granholm cuts the ribbon on a new Burger King, declaring victory in the creation of jobs. Let's face it, GM long ago lost sight of its customers, its mission and and its products and is paying the price, compounded by a fickle public that won't buy anything without a halo, deserved or not.

Only thing left to do is take bets on when GM reverts to the past tense.

Mr. Pebble

[DMD]

40 years ago there were just a token amount of foreign companies here in the US selling cars. Today it is clear that is completely different. As more of these foreign companies began selling cars here, it is only natural that GM and other makes were going to lose some of their marketshare. Roughly, GM has lost about 60% of its customer base since the gravy days of the past. That will never be the case ever again no matter who the dominant seller of cars are here in the US. I strongly believe the US customer is too fickle and are too taken in by trends for one company to be as dominant as lets say GM was 40+ years ago. With this dwindling marketshare GM has faced, one point remains clear, GM has remained the number one car manufacturer in the world. Vehicles that have helped keep GM at the top of the sales charts year in and year out, are varied. Cars and trucks that have done well recently are the Chevy Impala and Equinox. Both these vehicles are hot sellers and have exceeded the expectations of those within GM. Another hot seller has been at least in the last 6 months or so has been the Pontiac G6. The first year or two it had very disappointing sales but in the last 6 or so months the sales of that vehicles have really come alive. The Chevy Cobalt is another example of doing well in sales. Pick your Cadillac of choice they are all selling. Granted some Cadillacs are not killing the competition in sales just yet but they aren't considered a disappointment in the grand scheme of things. The Cadillac that comes to mind in this regard is the Corvette looking car, the XLR. They were expecting the XLR to sell roughly 5,000 of this cars a year. The last sales numbers I've seen are going to be about 4,000. Now that could have been adjusted to reflect higher numbers. This is because the last numbers I saw were those numbers back in June. Yes, and you can say, look 5,000 cars a year is nothing and they might not even meet expectations off such a low production run. True, numbers might be down for that model but keep in mind that car with a $77,295 dollars base price. When you are selling a Corvette with a starting price of $44,600. Lets say for the sake of argument, the Cadillac costs $5,000 dollars more for production costs which I'll be is a few thousand more than the real numbers are. Lets say the Corvette costs GM $37,000 to build, so it would cost GM $42,000 for the XLR to be produced per copy. They in turn sell it to dealers for $72,000 so GM's margin off the sale of the XLR is $30,000 - so this demonstrates you don't really need big sellers to make great money. Cadillac still has the Deville which has been the largest selling full sized luxury car in America for over a decade now. I realize that Lincoln a couple years ago outsold Cadillac overall, but The Deville was and still is the number one selling full sized luxury car in the US this was the case even while Cadillac sales were behind Lincoln. Cadillac has done very well with the CTS, CTS-V, STS, XRS, Escalalde EXT, and all the many other Cadillac offerings. Cadillac is in the middle of very strong resurgent days, I think that really angers people because they have so much interest in seeing other brands make the American nameplates look weak by comparison.

Can anyone tell me what make of cars of all the foreign brands sells most in China? Well, I'll save all of you some time. It happens to be GM. They surpassed VW in 2004. They have a marketshare of about 11% at the moment and its rising. So it is possible that GM might have a shrinking market here in the US and at the same time, be making more money and marketshare because it could be growing and thriving on an international level and have far less influence here in the US.

It wouldn't surprise me in the least that possibly in the fiture GM were to pack up nearly everything here in the US and move virtually all their operations to China. If they were to do that I wouldn't blame them. The UAW hates the Big 3 especially GM, to begin with, that is clear. The majority of the US public along with the press takes shots at GM every chance they get and the expenses to do business in the US continue to rise. If I were GM I would just chock it up to being globally competitive and ship all that capital and all the jobs over to China where I could pay workers legally 1/10th the salaries also, since China has socialized medicine you don't have to worry about paying health care costs. With all this savings you can easily make cars that are for the most part for export to the US and clean the clocks of Toyota, Honda, Ford, DC, MB, Lexus, BWM, and any other companies I've failed to mention. There is no way these cars companies could even come close to matching GM on prices here in the US. You could sell a Cadillac STS for half its present price and you would still make loads of profit at the same time gaining marketshare because people would be falling over each other trying to get to the local GM dealer just like they were in June 2005 with the employee discount for everyone when they were the sole company offering those reduced prices. June 2005 sales at GM rose 41%, you would have to really go far to beat that sort of interest in car products no matter who the manufacturer is.

GM is the #1 seller of cars in the world for a reason. Even if they don't offer everything mchastek wants, they are obviously selling cars someone likes otherwise they would not have been able to hold the #1 sales position now for 74 years straight. Although I profiled primarily Chevy and Cadillac sales numbers, I don't know many of the other sales figures for GM car brands. That being said, you do realize that the combined sales of GMC and Chevy trucks outsells Ford? - Yes, I realize gas is $3 a gallon but I feel that this gas price increases are a temporary thing. Once we find more countries willing to provide oil to us in the very near short term and we actually get tough with the stupid and extremely irresponsible environmentalists, totally ignoring the fact that having more refineries in the US is a national security issue. Also we have as much shale available to us in the West as Saudi Arabia has crude oil. If were weren't so shackled to the environmental laws that are on the books we would have shale that can be converted into oil on a large basis cheapily and easily. Once we have these refineries up and running the amount of oil available to us will significantly decrease our dependance on foreign suppliers of oil, thereby making us a much safer country.

[mchastek]

You might find this interesting. Retail U.S. Vehicle Sales for September 05 vs. September 04, sourced from www.automotivedigest.com (http://www.automotivedigest.com).

I know GM has been a leader for 74 years, but past performance isn't always a prediction of the future. They've gotta change with the times, or be passed up.

[DMD]

I understand GM's sales were down 24.2% Sept. 04/Sept. 05 - that taken into account and it really should be in the interest of fairness, GM was doing their employee discount for everyone in Sept. 05 that had pretty much played out its hand since it had been in operation for almost 4 months by the time late Sept. came around. Also upon the inception of the employee discount for everyone being instituted, GM was the only company for the first month to ofer it as a way to increase traffic into its dealership network. GM also was the only company to see huge gains that outstripped all the other companies doing that same program. June 05 sales were 41% higher than the previous June 04 sales period. Ford and DC never saw sales increases near 40% like GM did. I think we can also agree that GM outsells Ford and DC in any typical monthly scenerio you can think of, so for the #1 sales volume leader have a time when they are 40% more in sales the first month and than have successive months that were 20% or so higher in sales, I feel its safe to say GM is the sales leader and although they aren't yet the sales powerhouse of old, they are still outselling others by reasonably healthy numbers.

[mchastek]

Sales are great - IF you're making money! GM could boost sales 10000% if they sold all of their cars for a dollar. They need the sames AND the profit to stay in business.

[DMD]

Well, money making for GM is simple. It's called put the labor unions feet to the fire. It's obvious the UAW got for more generous deals from the Big 3 in the late 70's and 80's than they were certainly entitled to. Ford and GM are in the same position but GM's position is worse.

If I were GM I would push very hard for concessions. Case in point to how screwed up things are in the health care costs at GM. Did you know GM is the single biggest purchaser of of Viagra as a single entity in the world? That's right GM purchases more Viagra for its present and former employees than any business or private enterprise in the world. That has got to stop. If I couldn't get concessions through playing hardball, I would really push hard for court approval to allow me to have my subcontractors do as much building of interiors and exterior work and it would come to the auto plants where it would only require the parts to be bolted on the cars, case in point. I would have the entire door assemblies done in preferrably non union shops and once the door assembly is completed I would send the doors to the factory where a token number of people would be doing light assembly and put the doors on the vehicles. If that didn't work because the courts might side with the business destroying unions, than I would pack up my things and head overseas. I might build more stuff in Mexico, but I'd probably be better off going to China and Eastern Europe. I would have an international laundry list of suppliers. By doing it this way no matter what the problems you face in the future, you should be able to find an alternative plan that shouldn't derail your supply chains.

[Mr. Pebble]

DMD,

I don't know where you get your reasoning from but it certainly isn't from the facts available to most anyone. And, if you were saying the same thing from a UAW Hall, you along with everyone else would be calling yourself a Union Hack.

Let's take apart what you have said. First of all, the XLR has only sold 3101 units as of Sept. 30th. Extrapolated out, it would amount to less than 4200 per year, less than what GM wanted. And yes, the margin is higher but when you spread design, fixed and marketing costs, GM is actually losing its shirt (again) on this new vehicle. Cadillac, in spite of the puff, is not doing very well at all. The SRX is a disaster and is poorly rated by Consumers Reports. (The Hummer H3 was rated last). Sales have been down accross the line and would be down overall if it weren't for the STS, which was not available for most all of last year. The Lansing Grand River Plant, which makes the CTS, STS and SRX has only been running at 60% of capacity even though it is a mini plant that can make only 180,000 per year compared to nearly 300,000 at a full-sized plant.

And how can you say that the UAW hates GM when you have no idea what you are talking about. In 20 years at GM, I never heard an employee, Union or Management say they hated GM, not once. Let's talk ab out unions. I ask my Economics class why do workers join unions? They usually say for the wages or benefits, etc. I tell tham that the only reason workers join a union is when they percieve they are not being treated fairly. And that is the great failing of unions, including the UAW. They got the wages and benefits and work rules but the workers still feel they are being treated unfairly, including by their own union. Most GM union works only have to take a look at how badly GM treats its salaried people before the run over to the union hall and reaffirm their membership, the lesser of two evils.

And why do you want to shove concessions down the workers throats? First of all, GM was really dumb to give the workers what they did and the workers simply got on the gravy train with the help of the UAW. Second, GM is still horribly inefficient and they do nothing to change that while they lard up their executives with millions in pay and benefits for gross incompetence at best and flat out stupidity at worst. Third, the UAW has made huge concessions to GM (and Ford and DCX) in allowing outsourcing but they are pretty good at seeing the handwriting on the wall. They are alos bound to look out for the interests of the workers as their first and only mission which leads them to bargain for a soft landing as the concept of overpaid underworked overstaffing heads for the Smithsonian at the speed of light.

If you want to know how bad it is, let me give you an example. I got a call from a staffing agency asking if I would be willing to stand in as a supervisor for 30 days. The work used to be done at GM but it was outsourced to a Tier 1 supplier with low wages and few benefits. They, in turn, outsourced it to a Tier 2 supplier that paid even lower wages with fewer benefits. The Tier 2 supplier was hiring people from a staffing agency for even less pay. The supervisory job that was paying $150,000 a year at GM was now paying $12 per hour with no benefits. The Tir 1 company has to replace virtually their entire salaried work force at least five times per year, including the engineers, mostly because they treat their people like garbage. GM people, the anointed remainder left working for "God and Me" trained them to treat their people that way. I worked for another Tier 1 supplier and that's exactly what happened.

Why is it that your solution to the problems in the auto industry involves great sacrifice on the part of other and nothing by you. If some arrogant person wanted to get ahead by taking money out of your paycheck, you would be the first to scream about some kind of injustice. You even want o trash the environment to get cheap gasoline when oil shale is still not practical by any measure of common sense. Companies are getting tax breaks out their eyeballs at the expense of the working class. Go back 100-150 year and the incentive to get new industry was to allow them to dump their sometimes toxic waste into our rivers and streams. We have been cleaning up the mess ever since and the rivers and streams of West Virginia still run deep red from the sulphuric acid leaching from the coal waste dumped in the area of greatest convenience.

And as you pay up to 100% more to heat your house with natural gas this winter, remember is it happening because power plants are saving a few bucks by switching to natural gas rather than install pollution control equipment to clean up coal exhaust. You aren't saving anything on your electric bill because deregulation, something the republican told us would bring lower rates has not allowed astronomical increases in rates, the profits going to the few. Pacific Gas & Electric was a profitable and well run utility until the deregulators took over. They squandered their assets to the benefit of a few rich people who sold them their own electricity at overpriced rates on the cuff. When they owed enough, they forced PG&E into bankruptcy and got the company for free and then raised the rates. The stockholders lost everything, the retirees lost their pensions and health care and many of the few jobs left have been outsourced to India. Well, DMD, if you want to turn GM into a PG&E, you will pay twice as much for a car, five million workers will takes pay cuts that won't let them feed their children without a second job and the environment will be fine as long as you don't drink, breathe or touch anything.

I don't know why the people who think they have all of the answers will not be happy until this contry is a few rich people, including themselves, and a poor working class heading for Soylent Green. Stop being so arrogant and come up with solutions that will make things better for everyone, not just those in your little inner circle. And, if you have the time, give the higher ups at GM a big kick in the butt to help them get started.

It's bed time. Sorry about the typos. Will fix them tomorrow.

Mr. Pebble