Tuesday, June 07, 2005

Non-Surprise Of The Week: GM In Deep Trouble

I saw a story just the other day about GM posting their twelfth straight declining sales month. For those of you counting at home, that's a full year of declining sales. Not good news for them. I saw a couple stories today that indicate that even for a company as enormous as GM, it's starting to hurt. Also, this editorial writer had an interesting take on it. Hector Vex had a post partly on this issue, which inspired me to write this post. Parts of this post are taken from comments that I put on his blog.

My first vehicle that was really mine was right after graduating college (undergrad anyway), in '95. It was an '87 Buick Somerset and the transmission blew up less than a year later, and the engine blew up less than six months after that. I don't fault GM for that though. It was old when I got it. The '94 Saturn SL1 that I got in '96 though was also a piece of crap. It had problem after major problem before I got rid of it for my first foreign car, a new 2001 Volkswagen Passat. It has had a couple problems, but by far the biggest problem was 100% covered by the warranty, so I didn't pay a dime. Yes, I did buy it new, but with the warranty not up until I hit 10/100,000 I'm pretty optimistic that my cost of ownership will stay low. GM is making the same stupid mistakes they did in 1981, when my parents bought their first Toyota. GM was still making boat-cars that people just didn't want. Today, they are still pushing hard for more SUV sales at a time when gas prices are dictating otherwise. (Hector says that they are trying to push their other models more too now, which I have not seen evidence of yet, but I will pay closer attention to it in the next few weeks.) They were also very slow to get on the hybrid bandwagon that is now booming. American reliability ratings are slowly improving, but they are still not good, GM vehicles especially (Ford is somewhat better). Make good cars and people will buy them. I'm not going to buy a vehicle that is going to bite me in the ass on the basis of making a "statement" that buying American is the way to go.

You also can't put much blame on those "evil unions". Why is that? Look at the countries where the other automakers are beating us. Japan. Do they work for cheap? Germany? Cheap labor there? Sweden? Cheap labor in Scandinavia? I don't think so. It has everything to do with market position, and not being agile enough to follow the trends. People buy Volvos, VWs, Toyotas, and the rest because they sell the types of vehicles that people want to buy. For the good of the US economy, it would be good for GM to do better, but don't expect me to advocate corporate welfare for them to cover their inefficient business practices.


nicnerd said...

Some quick comments, because I am busy this morning.

Your Saturn was 2 years old when you got it and it was an economy model. There is no telling what sort of maintenance it received prior your ownership. The big fact that you left out is that you drove that car over 100,000 miles. Honestly getting into the 100k club in a crappy economy car of any make is an accomplishment.

Point two - I am no fan of GM, they are crappy cars that are poorly designed IMO. I prefer Ford.

Point 3 - Chrysler is turning a profit by the last news report I saw. Though I suppose you could argue that Chrysler is no longer American.

Point 4 - All of the cars that you mentioned are significantly more expensive than the average GM or Ford vehicle. If I wanted to pay $10k more I will bet that GM would make a better car. I have owned my Ford for 12 years and the only thing I ever replaced was the clutch and the radiator, not bad at all for 12 years. My other Ford is 3 years old and I have never replaced anything.

Speaking of poor design, tell the folks how you have to get your VW dealer to change your headlamp because the damn engine bay is completely sealed in your POS Passat.

Despite your assertions that people do not buy American. Ford has had the number one selling vehicle in America for 23 consecutive years. The number two is ummm a Chevrolet, the Silverado. Care to guess the number 3? Also American, the Dodge Ram. In fact, 7 of the top 10 vehicles sold are American. Oddly enough there is not a single euro yuppie car in the mix.

While the numbers are down and this is a bit troubling, the imports have a long way to go before they unseat the King. BTW, Ford posted a higher month over month in their latest report.

Two Dogs said...

I have driven GMCs and Chevrolets since I started driving at age 13. I have never had any serious problems with any of them. Currently I drive a Sonoma SLS with over 160,000 miles on it. It gets 16 mpg and turns 312 hp. I am satisfied with everything about it except the rough ride and I will probably keep driving it until the wheels fall off.

Erik Grow said...

I know you are a Ford guy. I am talking almost EXCLUSIVELY about GM here. I also never said anything like "people don't buy American". I just said I would buy American only if it's the best deal on a quality vehicle.

The point is with my Saturn that I should have ditched it long before 100K, given the problems it was having before then. It had expensive problems.

I also know that GM sells a ton of vehicles. Yes, they are cheap. I also know that the margin on said vehicles is low. The post is about why GM's sales are declining. They need to find a way to invigorate their brand to make people want to buy them even when they are NOT giving away profit-eating sales.

I never said that the Passat is perfect either, but it's very safe, comfortable, quiet cabin, handles really well.