The Carmagedonn Thread: FCA and "Consolidation"

[Philly]

GM shrinking down to four-ish brands, plus or minus a few.

In an interview Sunday with Automotive News (sub. req'd), Troy Clarke, GM's North American president, said that General Motors will be able to make good on its promise to Congress to drastically cut costs. Clarke said that GM will now focus its "product and marketing resources" on Buick, Chevrolet, Cadillac and GMC. That would leave Pontiac, Saturn, Saab and HUMMER in automotive limbo. As part of that same plan presented to lawmakers, GM said it would sell or close Saturn. And since no one has yet stepped forward with cash, the future is not at all certain for the unique brand despite what GM's marketing VP Mark LaNeve says.

In a separate interview, Bob Lutz told AN that Pontiac will also have to get by with only four models: the G8, G5, Vibe and Solstice. Or five models if you count the Solstice coupe separately as Lutz does. Shrinking the brand would complete yet another promise GM made to Congress to make Pontiac a niche brand.

Does this actually say anything? I think it's something they have to do though. Saturn and HUMMER aren't too big of losses, although I think Saab is a brand with potential gone wrong. Hopefully GM can either fix that brand or sell it to somebody who can start making proper Saabs again.

I also wonder how Pontiac will do. If they make up half a brand out of GM's four with that line up, it'll be interesting. It seems GM wants to keep them around, but I almost never see any of the four cars they want to keep around.

 

[buickgnx88]

Not a fan of this decision for a few reasons.

Buick: was a great brand until the late 90's when it became stale. I see how it fits in that it's a mid-luxury brand like Mercury, but the only reason it is still around is because of Buick Asia.

GMC: They should really drop them as a passenger brand and just keep them for commercial vehicles, sort of like what Isuzu is doing. In doing so, they could leave the luxury trucks to Cadillac and the more rough-and-tumble everyman trucks to Chevy.

Saturn: I really took a liking to this brand back in the 90's when they had the idea of a great, affordable American car, mixed with the popular dent-resistent plastic panels and great customer service. My dad still has his '93 SC2, which save for some minor issues is still running great and is a fun car to drive. Heck, even when they introduced the L-Series and VUE they were still a great brand.

Now they've gone down the route of rebadged and imported vehicles, like every other brand GM has.

I suppose if they have to kill off Saturn then so be it, but as I've mentioned before it would be great if they made Saturn the affordable sporty-small car brand, similar to what Scion is to Toyota.

HUMMER: Not surprised to see them on the chopping block, but what they should do is take the H3 and rebadge it as a Chevy to run alongside the Colorado and compete against the Jeep Wrangler. Hell, if they could stuff in the 3.6L DI V6 from the CTS, it would get better economy than both the V8 Alpha and the Wrangler, while at the same time getting about 100hp more than the wrangler and 4hp more than the V8! Now that would be one bad-ass off-roader!

 

[Philly]

I suppose if they have to kill off Saturn then so be it, but as I've mentioned before it would be great if they made Saturn the affordable sporty-small car brand, similar to what Scion is to Toyota.

The problem is that that segment doesn't exist anymore. Toyota doesn't sell many Scions anymore, and all the other cars that were down in that range have moved up a bit. When you're got a Beat going for under $10,000, less than a Versa (which seems to be the "cheapest" car you can buy), you're not going to be making a profit, or even making losses on a car that people would buy (considering how much the cheapest cars have improved lately) that would undercut that further.

 

[buickgnx88]

You have a point there. They have been improving quite a bit lately.

 

[YSSMAN]

I'm not surprised by the news at all, its what we've been expecting in the pro-GM circles for a while. Its sad to see some of the brands go, but I guess overall I was most-concerned with keeping Pontiac than anything else.

What the article didn't mention is that GM is having a helluva time finding a buyer for Saab and HUMMER. Although there was some initial interest for the HUMMER brand in India and China, and even going back to AM General, they've all turned it down. I'm beginning to think that they may just shutter the brand, ala Oldsmobile, but its hard to say. As for Saab, apparently the cash spicket is still pumping out money. The new 9-5 is reportedly still on track, and based on Detroit so far this year, a lot of Saab technology is being rolled into "average" GM models. My guess for Saab is that they'll be treated like Volvo at Ford... Never really there, never really gone, but happy to get money from the higher ups.

As for Saturn, its a disappointing end to a brand that had a lot of promise, and a solid push at the end, but poor execution overall cannot fix the problem all that easily. Saturn, presumably, won't find a buyer either. At least, I'm doubting it. Perhaps a Chinese company, but that seems like a bit of a stretch at this point. The Astra fell flat on its face, and the Outlook was overrun by in-house competition. Both were excellent models for what they intended to do... But there still isn't enough of a push to get them out the door.

Finally, Pontiac. To be honest, they needed to be cut down. Significantly. I don't have any problem with what they had suggested doing, likely limiting the line to the Solstice, G8, G6 and (presumably) G3. Its sad to see it all happen like that, but to keep the brand alive to allow for the better cars to come later... It must happen. Because, I'll be honest with you, if they manage to pull off a RWD G6 like they have promised before... It will be awesome, and they'll likely sell a bazillion of them.

 

[Tornado]

Idiots.

 

[JCE]

Idiots.

+1 Seriously, ditch Buick and Hummer and concentrate on Pontiac, Chevy and Cadillac. GMC can just be one truck for all I care. Saab can prosper without GM (BMW are you listening?). GM is really losing my respect.

 

[Philly]

The problem with keeping Pontiac is that it really serves no purpose in this economic climate. The brand stands for being the inexpensive yet sporty alternative to otherwise boring transport. But that sporty bit is a little bit of an extra that costs money that people won't buy. Having a properly sporty Pontiac lineup will probably make GM lots of money once the economy decides that people can pony up for a little extra driving excitement, but just not now.

 

[YSSMAN]

That depends on how they execute it. As of now, Pontiac isn't worth much because they haven't committed to building special, sporty alternatives to Chevrolets and Buicks since the early 1990s. I'm honest when I say that the management and product planning at Pontiac needs to shift dramatically in order for this plan to work out as well as it could, but nevertheless, I believe that as a brand... Pontiac stands to have far more success than Saturn altogether.

As for the bitching about Buick, yes, I understand the concerns about Americans not exactly caring. But, a well done ad campaign that actually promotes vehicles that people should be buying... They can sell cars, and they will sell cars. The Regal and LaCrosse will be stellar products, and honestly, I think the only thing Buick needs is some kind of coupe. But thats just me.

 

[JCE]

YSS, Buick has to go in favor of Pontiac. Life needs sporty to take the boring away. Buick's aren't even nice anymore and haven't been for over 25 years.

 

[YSSMAN]

I understand what you're saying, and don't get me wrong, but the problem is that Pontiac does not have a product lineup worth saving. Outside of the G8 and the Solstice, and perhaps the Vibe, they have absolutely nothing that out ranks the in-house competition.

Small Cars

Chevrolet Aveo vs Pontiac G3: Draw

I'm unaware of any major upgrades that come with the Pontiac version. Yes, it looks better overall, but that is subjective at best. An arrowhead does not make it better.

Chevrolet Cobalt --> Chevrolet Cruze vs Saturn Astra vs Pontiac G5 vs Pontiac Vibe: Chevrolet, Pontiac in a very close second

The lack of a turbocharged model, and a body that is only sold as a coupe severely limits the reasoning behind the G5. Granted, I think the interior is a much nicer place to be in the Pontiac, but no available rear doors makes it a no-no for small families or people obsessed with practicality. Throw the Cruze in there within the next year? Forghetaboudit, unless Pontiac gets to go and make a radical commando version of the car, I don't see why the G5 needs to continue on.

...As for the Vibe, my guess is that it could be one of the four models to continue on. It fills a "void" (so to speak) in the GM lineup, offering customers an affordable, slightly bigger-than-average compact with plenty of cargo space and great fuel economy. But, if we're getting a Cruze wagon, the Toyota-based Vibe becomes somewhat redundant again. Unfortunately with most of Pontiac's current lineup, its an "if, then" problem once again.

Mid-Size Cars

Chevrolet Malibu vs Saturn Aura vs Buick Regal (2010) vs Pontiac G6: Buick, Chevrolet for now

Simply put, small upgrades on the G6 will not save it. The interior has just barely crept toward what the Malibu has, but mechanically speaking, it still falls short. Transmission and engine options are terrible, the build quality is not yet up to snuff, the only saving grace is the rather good-looking coupe option that also comes with the convertible as well. Much like the forthcoming Cruze appearance, when the Regal (read Insignia) shows up next year, it will otherwise wipe the floor with all of the GM mid-sizers altogether.

Chevrolet Impala vs Buick LaCrosse vs Pontiac G8: Pontiac, by a hair

The Pontiac has what counts for petrol heads; RWD performance, a cheap price, and a massive V8 hanging off the front end. The build quality is rather good, and the interior is actually a very nice place to be. The problem is, its not for everyone. The new LaCrosse, simply put, is an amazing piece of work. There are Cadillac-esque materials inside the cabin, Saab and Cadillac grade mechanical bits and pieces under the hood, and it all comes in well under $35K. Preferences to performance make a credible case for the big G8, but for most Americans, the Buick would be the better overall options.

Crossovers, SUVs

Chevrolet Equinox vs Saturn VUE vs GMC Terrain vs Pontiac Torrent: Chevrolet

Although I personally prefer the Saturn, the Chevrolet has the advantage of time at this point. As far as I know, there are no plans to re-do the Torrent, and I believe the Terrain project may have been shelved in the US (I'm not 100% sure). Why they even did the Torrent in the first place... I do not know.


====

Overall, Pontiac has somewhat decent products that cater to a very narrow audience. Cutting the brand down to four models (Vibe, G6, G8 and Solstice... perhaps?) focuses on their relative strengths, and leads them into the future with reasonable options against the in-house competition as well as what is available from other brands. When it all comes down to it, the BPG setup needs to work efficiently to sell cars that compliment one another to form one brand out of three. Pontiac brings the kids in, Buick takes care of the middle-aged folk, and GMC handles the "trucks."

At this point, I think we're somewhat lucky we even get to keep Pontiac. In terms of history and what the brand can still offer, I'll take a Buick-Pontiac alignment much easier than keeping Saturn in there constantly changing its mind as to what it needs to do.

* Point of Reference *

I believe, now, it is Buick's duty to take on the former declaration that Saturn was Opel/Vauxhall USA. If we are to receive more Chinese models, they are likely to begin looking like their European counterparts. Something I'm not about to complain over...

 

[Philly]

I wonder how Pontiac would do if they continued producing the current G5 once the Cobalt was replaced by the Cruze and making some revisions to the G5 to make it more sporty and keep it as a sporty/cheap alternative to the Cruze. And then did the same with the G3 and GM axed the Aveo.

It might give Pontiac the image of being the brand that gets its big brother's hand-me-downs, but it might keep the brand around as something they don't need to put money into during the downturn until they had enough money and consumers to build some good, RWD cars.

 

[Tornado]

As for the bitching about Buick, yes, I understand the concerns about Americans not exactly caring. But, a well done ad campaign that actually promotes vehicles that people should be buying... They can sell cars, and they will sell cars. The Regal and LaCrosse will be stellar products, and honestly, I think the only thing Buick needs is some kind of coupe. But thats just me.

The Aurora, Intrigue, Bravada and Alero disagree.

 

[YSSMAN]

On the Aurora point, I most-certainly agree. That was one helluva car, and to see Oldsmobile die along with it was a disappointment. However, the Lucerne replacement has otherwise been a pretty decent successor, don't you think? Or maybe it is only to me in GM land... The odd Saturn --> Oldsmobile --> Buick relationship is exactly the thing that we want to avoid again this time.

The best solution I have is to specialize brands intensively, cutting several of them down to five models or less. It eliminates overlap and allows for specialization, but unfortunately, I believe it ends up costing more money by the end trying to keep everyone happy.

 

[a6m5]

Not a fan of this decision for a few reasons.

Buick: was a great brand until the late 90's when it became stale. I see how it fits in that it's a mid-luxury brand like Mercury, but the only reason it is still around is because of Buick Asia.

GMC: They should really drop them as a passenger brand and just keep them for commercial vehicles, sort of like what Isuzu is doing. In doing so, they could leave the luxury trucks to Cadillac and the more rough-and-tumble everyman trucks to Chevy.

Saturn: I really took a liking to this brand back in the 90's when they had the idea of a great, affordable American car, mixed with the popular dent-resistent plastic panels and great customer service. My dad still has his '93 SC2, which save for some minor issues is still running great and is a fun car to drive. Heck, even when they introduced the L-Series and VUE they were still a great brand.

Now they've gone down the route of rebadged and imported vehicles, like every other brand GM has.

I suppose if they have to kill off Saturn then so be it, but as I've mentioned before it would be great if they made Saturn the affordable sporty-small car brand, similar to what Scion is to Toyota.

HUMMER: Not surprised to see them on the chopping block, but what they should do is take the H3 and rebadge it as a Chevy to run alongside the Colorado and compete against the Jeep Wrangler. Hell, if they could stuff in the 3.6L DI V6 from the CTS, it would get better economy than both the V8 Alpha and the Wrangler, while at the same time getting about 100hp more than the wrangler and 4hp more than the V8! Now that would be one bad-ass off-roader!

Agree with many points in here, especially on GMC and maybe Saturn. Philly says Scion doesn't sell anymore, which is true. But everybody knows that xB built that brand, and Toyota botched the redesign VERY badly. You just can't go wrong with catchy cars that are well equipped while featuring dirt cheap MSRP and reliability. You just can't, especially in this economy.

Unfortunately, I don't have faith in Saturn dealer networks. Maybe built-in brand, like Geo's? But I'd suggest a brand name change, and that pretty much equals the deletion of the Saturn brand.....

 

[TVC]

Get rid of Pontiac and GMC. Chevy can take all the high selling Pontiac vehicles and GMC already copies Chevy so no need to change anything.

 

[YSSMAN]

I don't really think there is anything wrong with the Saturn network as a whole, but they've really let their standards slip quite a bit as the new models and brand changes rolled out. They don't seem to know much about the vehicles they're selling, and furthermore, they continue to lie to themselves and their customers on the future of the brand. Ask any Saturn dealer about the future of the company, they're likely going to tell you that GM remains committed to the brand as a whole. At least, thats what they were telling us fewer than three weeks ago.

Saturn, more or less, was lead astray. To be honest, its really not much different than what happened to Oldsmobile just before they were shuttered. Great new models were introduced, sales continued to remain flat, and GM needed to consider whether or not they needed to cut their losses. If Saturn was to remain the sub-Chevrolet brand, my guess is that they would have maintained more success than what they had... Or, if GM would have been able to fully implement the Opel/Vauxhall integration easily, it would have likely gone better as well. But, if the rumors are true that more Opel/Vauxhall models are going to Buick instead, that would be the final death-blow for Saturn altogether.

 

[YSSMAN]

Toyota Burning Through Cash...



...The Joker Seems Pleased




*Click Title for Link*​

The cash burn rate through 2008 at General Motors, Chrysler and, to a lesser degree, Ford, has been one of the big new stories in the auto business. After a disastrous third quarter, GM was down to about $11 billion and, along with Chrysler, was in danger of having insufficient cash on hand to pay bills at the end of the year.

Meanwhile, Toyota has been raking in the profits for ages now and was thought to have up to $90 billion in reserves as recently as a couple of years ago. The other day, however, John McElroy reported that Toyota may be down to only $18.5 billion in cash with rapidly spiraling debts.

The company has spent heavily on new factories and new products in the U.S. in recent years, but saw its sales plummet as much as the domestics in the second half of 2008. Its total current short-term liabilities are now roughly equal to its total current assets, and its cash reserves put the company on par with Ford. In recent months, Toyota has been moving aggressively to cut costs and budgets have been slashed company wide. The automaker famous for avoiding layoffs was also reportedly considering shedding some jobs in the U.S. and UK, but had denied those reports are true.

To quote myself from the OP:

POOP.

If Toyota is burning through cash this quick, is nothing sacred? If thats the case, what kind of situation are the other big automakers having? Particularly those in Germany, Italy, the rest of Japan, etc?

God, its just insane. Ford turns down all of the federal cash earlier this week, while GM gets their next $5.4 BN, and Chrysler gets partially bought out by Fiat. Hooray crazy market conditions!

 

[seckcimike]

Lets just put it this way, if toyota is in bad shape dont expect the american cars to be in good shape any time soon. This issue lost thousands of jobs, I hope a miracle happens.

 

[TVC]

Internationally the auto industry isn't totally ruined. Look at Porsche and Fiat. Both companies are doing pretty well.

 

[Jim Prower]

The bigger they are, the harder they fall. It seems the same way with the speed of the rise, as well...Did Toyota get too big, too fast? Like the Housing Market? Has their bubble begun to burst?

Did they get caught becoming...boring?

 

[Omnis]

What are you guys talking about? The reason companies build cash reserves is to "burn" through them during tough times like these. Toyota actually had the sense to save for the worst instead of being idiots with their business, and then crawling to their government to save them from bankruptcy.

But it won't be over for a while so who knows what any company will stoop down to doing.

 

[niky]

Internationally the auto industry isn't totally ruined. Look at Porsche and Fiat. Both companies are doing pretty well.

Yeah, because Porsche sells more stock options than cars. They made around 4 times more in profit from stock manipulation investments than from selling motorcars. So they're not exactly being dealt a hammer blow by the bad market (though it has hurt their sales).

Everyone is suffering. Even the previously unflappable VW (which didn't respond to the downturn early Q3 last year) is now in the negative in terms of sales.

----

They got caught mega-expanding. Toyota management is going to wish they didn't push so hard for that number one spot in the past three years... in fact, they didn't celebrate overtaking GM again earlier this month. They're hunkering down and downsizing as quickly as they can. The way that management is reacting to the crisis may seem drastic, but there's a lesson to be learned here... want to be successful? You've got to be decisive.

http://www.thetruthaboutcars.com/gm-and-toyota-a-tale-of-two-loser/#comments

GM And Toyota. A Tale Of Two Losers

By Bertel Schmitt
January 24, 2009

General Motors hasn’t made money on its core auto business since 2004 - and did nothing. Same cars, same talk, same mismanagement. GM is in the government’s intensive care, hangs on a the tax payer’s money drip, and still hasn’t changed.

Contrast that to Toyota. Toyota will announce its first operating loss in its history - approx $1.6b, less than GM’s monthly cash burn - and Toyota went to battle stations months before the announcement.

Toyota does everything GM failed to do. They changed the management. Akio Toyoda, grandson of the founder, will take over as president. Even before he’s officially taking the job, Toyota “appears ready to overhaul its entire operations, from development to production to its sales network,” the Nikkei (sub) reports. Nothing is sacred. Plants are idled worldwide. Output is slashed. A few days ago, the company held a meeting in Nagoya that was attended by 1,000 representatives from Toyota dealerships across the country. Toyoda made it clear that he would not hesitate to drastically revise the firm’s domestic sales structure. And that’s just the beginning. More drastic moves are afoot.

Toyoda has created a team of employees charged with devising new corporate visions, including making decisions on future domestic and overseas lineups, production system and sales networks.

While GM is painting rosy pictures about pent-up demand and sales which will soon rebound, Toyota is preparing for the worst.

Total global output capacity for all carmakers is 100m units a year. Actual demand is estimated at about 60 million cars worldwide. According to industry figures, capacity utilization below 80 percent spells trouble. With capacity utilization of 60 percent (and falling) the world’s auto industry is in deep trouble. Again, Toyota alone has excess capacity of more than a million units.

While GM was betting on SUVs and available credit, Toyota aims to take the lead in the industry by introducing not only the most environmentally friendly cars but also budget vehicles for emerging countries and (yes) slick models that can spark young people’s interest in cars.

While GM was fleecing its suppliers and even drove its own Delphi into bankruptcy, Toyota is worried about the health of its suppliers. Toyota has conducted an emergency poll of around 50 parts suppliers, to grasp their fundraising situations. The upshot is that their financial health is rapidly worsening. “We will possibly need to help them secure necessary funds,” said Senior Managing Director Atsushi Niimi, who is in charge of procurement.

While GM coddled the UAW, Toyota slashed most temporary workers, and may let unionized workers go also.

Toyota officially replaced General Motors Corp. as the world’s No. 1 automaker in 2008. At Toyota, this is already regarded as an embarrassing non-event. Everybody knows that the reason is GM’s poor performance, rather than Toyota’s strong results. There were no celebrations at Toyota. Actually, it is an irritation. As the Nikkei says: “Staff are simply left without a new goal to shoot for and a bit weary from frequent changes in production schedules. To raise the morale of its people and suppliers, Toyota needs a new goal other than just “growing bigger” or “becoming No. 1.”

Oh, and if the Carmageddon forces Toyota to make interesting cars again, thank goodness.

 

[YSSMAN]

That has otherwise been my major critique of Toyota for a while, they were too big for their britches too quickly. Yes, they sold 600K more cars than GM this year, but in the grand scheme of things, was it really worth it? They blew hundreds of millions of dollars on their truck program... all while the SUV market collapsed around them, causing them to shutter at least one of their truck plants for the time being. Then there is the plant in Mississippi, the (formerly?) planned plant in southern Michigan, all of which continues to "float" in some kind of evil limbo that prevents jobs from being created.

Toyota has done a good job of making sure they have money for times like this, and certainly, these are unprecedented times. But when they have their first major operating loss, ever, and won't release their 10+ year plans, and now are looking at cutting jobs and shuttering more plants... Yeah, I think there could be more going on than we actually know about.

As I told the Toyota guy today, "If you guys are having a hard time selling Corollas and Camrys, God help us all."

 

[TVC]

Yeah, because Porsche sells more stock options than cars. They made around 4 times more in profit from stock manipulation investments than from selling motorcars. So they're not exactly being dealt a hammer blow by the bad market (though it has hurt their sales).

Everyone is suffering. Even the previously unflappable VW (which didn't respond to the downturn early Q3 last year) is now in the negative in terms of sales.

Porsche sold more cars than they were expecting and they make more money for each car sold than any other car company.

 

[Azuremen]

Porsche sold more cars than they were expecting and they make more money for each car sold than any other car company.

But they have money from playing and manipulating stocks... that was the point.

 

[TVC]

But they have money from playing and manipulating stocks... that was the point.

I doubt they are complaining. Owning Audi, Volkswagen, Lamborghini, and Bugatti is a lot better than owning a few failing companies like GM.

Porsche executives:
GM executives:

 

[niky]

Porsche sells sold a lot of cars (I love those strike tags) because they were riding on the wave of excess that typified the high-end market in the last wave of excess. Porsche sells cars with annoyingly high mark-ups and extremely expensive options and people just lap them up. And they also got on the SUV tidal wave, and made a ton of cash on that. In fact, much of Porsche's car-making profit came from the Cayenne, and not their supposedly bread-and-butter products, their sportscars.

And now they're in the same fix as everyone else. Oh, they have a lower manufacturing output and already have high profit margins, so they're not crying as hard. But a lot of people will not be buying Porsches this year.

 

[Small_Fryz]

how well is ferrari going?

 

[seckcimike]

All these top line manufacturers will barely get affected, you know why? because from the start only rich people buy them. There is a big seperation here between middle class citizen/ upper class, which could afford these cars! the only one i can really think off is Range Rover being in a tough pickle.

My point is there is much much much more lower/middle class people in this world, which these manufacturers like gm are aiming for, so its obvious they would get hit the hardest. Its reality thats why all these high class manufacturers barely get touch; there aim was for rich people to purchase their product right from the get go. Rich people do not go straight to being broke, its a step by step process.


Wealthy - Rich - Upper/Lower class - Poor - Broke