GM question

[LS1Hawk]

I like to think that I am pretty knowledgeable about the automotive industry and General Motors. However, I am no expert. The other day a question sprung up in my mind and I don't think I've seen it brought anywhere in the automotive press, blogs, etc. So I am going to throw it up here and see what kind of traction it generates.

The scenario is this: Let's imagine that "Old GM" never took on any expansion brands over the course of its history. By that I mean Saturn, Hummer, Saab, and even Geo. Let's imagine that all these years they had just remained Chevy, Pontiac, Buick, Olds, Cadillac and GMC...call them the Classic 6 (not counting LaSalle or Oakland).

The question is this: If GM never took on the above expansion brands and remained with just the Classic 6 brands, would they have stayed profitable? Would they have been able to avoid bankruptcy/government assistance?

How was GM doing before they took on the first of these expansion brands? It can be argued that if GM never had the expansion brands, they would have had more resources available to the Classic 6 for product development, marketing, etc. Perhaps Olds would have survived. But say if they still faced bankruptcy, maybe we would have lost only one Classic brand rather than two.

What are your thoughts?

[NastyEllEssWon]

gm killed themselves when they put all of their collective eggs in one basket and hopped on the fwd sedan and huge suv craze. most of gm's mid 90s cars are just throwaways with little variations between. im pretty sure Saturn was one of their more profitable ventures

[Blacdout96]

No, they would of stil fell into the were going to make 4 different versions of the same vehicle and hope the public doesn't catch on deal, and like what Nasty said ,they hopped onto the FWD and SUV craze.

[91chevywt]

I'm no expert myself, but I think GM still would have ended up in the same place. One big factor in the failure of GM was the concentration on trucks and SUVs. But Hummer only produced 3 true models, with the H2 being the most popular. Between Chevrolet, GMC, Cadillac, and Buick, the market became saturated. Besides the SUV flop when the fuel 'crisis' came, GM was building too many cars using the same parts and platforms. Like Fritz Henderson said, they were producing a bunch of cars hoping one or two would be a success.

I hear a lot about GM cars being unreliable, mainly from the people that drive hondas and toyotas. Theres even jokes about it now. I just don't see it. This is the mentality that killed GM. I don't see how theyre any less reliable than any other manufacturer. I think its more of the dealership, and service that gave GM a bad name.

[WildBillyT]

I guess I'm the odd man out.

I think they would have been OK. I see every day how "expansion" can backfire, and I think that's what happened. If they had pumped development money into their core models instead of thinking up new ways to resell them with new cladding they would have had some better cars. Starting a new brand is not cheap, and that was their mistake.

[Blacdout96]

Originally Posted by 91chevywt

I hear a lot about GM cars being unreliable, mainly from the people that drive hondas and toyotas. Theres even jokes about it now. I just don't see it. This is the mentality that killed GM. I don't see how theyre any less reliable than any other manufacturer. I think its more of the dealership, and service that gave GM a bad name.

QFT, and not just that, but alot of american cars are just as reliabe as import cars. I see it that American cars developed a bad rep in the 80's when import cars were coming in and being alot more reliabe then American cars. American companies were conent in what products they were selling ,and to top it of, were trying to bring fuel injection into the market, something that was still relatively infant in mass production. At that time, American cars were expected to get 125,000-150,000 and be considered whooped, and time to get a new car, while Honda's are still rolling at 250,000 with so much as basic maintenance needed. Since the mid 90's I've seen American cars really step up to the plate and match or even exceed what the Reputations the import cars produced, the downside is word of mouth, and past experiences 20 years ago is what hurt American reputation, and I feel it will stick until Honda and Toyota get a few more multi million recalls, then I believe they will be on even playing ground.

I can't tell you how many Toyota's and Honda owners come through the door anymore, yet they seem to buy more parts then people who have newer US cars.

[WildBillyT]

Originally Posted by Blacdout96

QFT, and not just that, but alot of american cars are just as reliabe as import cars. I see it that American cars developed a bad rep in the 80's when import cars were coming in and being alot more reliabe then American cars. American companies were conent in what products they were selling ,and to top it of, were trying to bring fuel injection into the market, something that was still relatively infant in mass production. At that time, American cars were expected to get 125,000-150,000 and be considered whooped, and time to get a new car, while Honda's are still rolling at 250,000 with so much as basic maintenance needed. Since the mid 90's I've seen American cars really step up to the plate and match or even exceed what the Reputations the import cars produced, the downside is word of mouth, and past experiences 20 years ago is what hurt American reputation, and I feel it will stick until Honda and Toyota get a few more multi million recalls, then I believe they will be on even playing ground.

I can't tell you how many Toyota's and Honda owners come through the door anymore, yet they seem to buy more parts then people who have newer US cars.

A lot of that was also due to the stresses involved with some of the engines. A 200hp engine back then was a big deal, when a typical Honda Accord had 86 hp and 100 lb-ft through a small 3 barrel carb.

[Blacdout96]

Good point WBT, yeah 200hp out of an 8 cylinder, that still drank gas like an 8 cylinder, that was another bad point, and during the 80's when companies were trying to bring out gass sippers to compete ( Dodge Omni, Ford Festiva/mustang 4cylinder, etc) Alot of companies only had a few cars in that catagory, but continued bringing out 2 ton land yatchs with a big hulking V8 instead of trying to adjust to the market, they tried to focus on keeping with trtadition. They were thinking 1960's, but the gas prices and technology were speakign 1980's, and everyone was a little slow to adapt.

[V]

from what i remember reading, Saturn was in the red from day 1, that was a company that never made money for GM.

Im sure Al will be able to verify or dismiss that.

[edpontiac91]

GM shot themselves in the foot soooooooooooo bad during the '80's that the bad taste lingers for a long taste. Some of the examples were the 4100 V/8 in the Cadillac's, the 8-6-4 mess, the Iron Duke 4 that leaked oil, caused fires in the Fiero, all the rack and pinion steering boxes that binded up, the 2.8 & 3.1 V/6 with the intake manifold leaks and much more. Look at the styling of the 4 dr sedans, a rolling shoe box on wheels. Then there was the Cadillac Cimmeron that became the world's most expensive Cavalier. Lets not forget the BIGGEST FARCE of the ALLLLLL, the DIESEL 350!!!

[BigAls87Z28]

Originally Posted by Blacdout96

No, they would of stil fell into the were going to make 4 different versions of the same vehicle and hope the public doesn't catch on deal, and like what Nasty said ,they hopped onto the FWD and SUV craze.

You and Nasty would be wrong on the SUV thing.
SUV's made money. Tons. Its what made GM, Ford and Chrysler money.
They could never make money on small cars due to cost structure, especially when compared to the Japanese.
Its a reason why cars didnt get much attention, but trucks did. GM and Ford were 50% into the market that people wanted.
GM and the others didnt force people into SUV's. And if you are the owner of a business, and your most profitable product is selling like gangbusters, in a segment you dominate in, why would you not invest more into them then your other lesser, non-profitable products?

Toyota saw this, as did Honda, Nissian, and even VW was developing a pick up truck, to be made in America. I think its still on the books somewhere....
Truck idea and its profitability isnt linked to just the domestics.

Originally Posted by LS1Hawk

I like to think that I am pretty knowledgeable about the automotive industry and General Motors. However, I am no expert. The other day a question sprung up in my mind and I don't think I've seen it brought anywhere in the automotive press, blogs, etc. So I am going to throw it up here and see what kind of traction it generates.

The scenario is this: Let's imagine that "Old GM" never took on any expansion brands over the course of its history. By that I mean Saturn, Hummer, Saab, and even Geo. Let's imagine that all these years they had just remained Chevy, Pontiac, Buick, Olds, Cadillac and GMC...call them the Classic 6 (not counting LaSalle or Oakland).

The question is this: If GM never took on the above expansion brands and remained with just the Classic 6 brands, would they have stayed profitable? Would they have been able to avoid bankruptcy/government assistance?

How was GM doing before they took on the first of these expansion brands? It can be argued that if GM never had the expansion brands, they would have had more resources available to the Classic 6 for product development, marketing, etc. Perhaps Olds would have survived. But say if they still faced bankruptcy, maybe we would have lost only one Classic brand rather than two.

What are your thoughts?

The question has been raised before. Why did gm make more brands when they already had enough?
Geo was a brand where GM could use its vast empire of automaker friendships to form a sales channel to sell the cars here in the US.
Saturn was formed around the idea of making a non-GM GM brand. It served the basis for a lot of other automakers, and its job was to tackle the imports head on since at the time they only made small, 4cyl mostly economical and low maint. cars. If anyone remembers old Saturn commercials and dealers, it was a family. They would invite you to the Spring Hill plant in Tenn, where all Saturns were built for a family party! You would take a picture with your car and the staff of the dealer when you took delivery! No haggle pricing! This from GM? Old, stodgy GM?
Hummer was just a means of making more money and selling more trucks. But there was also an established name and an image that is still intact today, for the most part.
Now...
GM went bankrupt for something totally different and nothing really to do with what brands they had. The cutting of the brands is something different.

You have to understand what happened and the steps that took place to get us to where we were in late 2008.
In 2006/2007, GM made had been making huge strides in quality, design, and fuel economy. Solid powertrains and better vehicles were coming out every time you turned around. The return of Camaro, 505hp Z06's, the award winning Saturn Aura, Chevy Malibu, and Cadillac CTS all were bringing in praise. On top of that, GM made HUGE strides with the UAW to cut costs of manufacturing that would take place on Jan 1st, 2010. GM also debuted the most advanced hybrid technology with the two-mode system for its trucks, on top of the Chevy Volt, an all electric car with extended range, something that people said GM would never build again. And with all this, they had more coming. Higher quality sedans, better technology, advanced powertrains, a renewed focus on cars and crossovers.
All this costs money. Billions. Just an idea, the Zeta/VE platform, the one that sits under all the Holden cars, cost GM 1 billion dollars. And thats cheap, for a low volume car, built on an island. Throw in another 300m and you get a Camaro. Now thats cheaper then say, the 98 4th gen revision that cost a little more then the whole 5th gen program did.
When trucks stopped selling, or selling at slower rates, plus the fact that GM put a TON of money into the GMT900 trucks and suv's, which were nto going to give the same high returns as the last generation truck, you have a drop in income.
Plus, GM still didnt make money on cars, and they had to spread any and all development costs across several brands. This hurt the cars individually.
So GM took out loans from large banks.
Well those banks took a ****, as well all know, and GM was left with no where to draw money from.

Now, Ford did the complete and total opposite. Ford, running blind, looked like they would dissolve by the end of 2007. They had just spent a crap ton of money revamping the Focus, more money then it would have cost them to bring over the fantastic European spec Focus. Instead, we got what we currently see on the roads.
Ford has lackluster sedans, its F150 was its only hope,a nd the Mustang was counting its days till Camaro and Challenger both showed up.
Bill Ford Jr, stepped down from being CEO, and in came Allan Mullaly, former CEO of Boeing. His first move was to halt everything, haulting the flow of money. He then went to the banks and mortgaged the whole Ford company, down to every pencil and staple. They said they were not going to focus on sales numbers, which traditionally the Big 3 needed to make any money on cars, and they would focus on increasing the income per car. Once Mullaly sorted things out, he handpicked certain programs to move ahead, and canned others, The programs were vital to Ford moving ahead, and not frilly stuff (like Mustang getting a new platform for 2010, but just a redesign, and then a year later launch the new powertrains)
Now, GM made the big strides with the UAW, that also helped out Ford and Chrysler since GM usually sets the tone, then the other two go in and change a few things for thier respective companies.
So, here we are, mid 2008. Banks are falling fast, and GM is burning through development money trying to get these programs launched. Ford on the other hand, sits back and waits it out with the money they got before the banks could no longer lend and/or fail. GM needed money, so they went to the only game left in town, the Government.
Now, it was brought up that GM had way too much debt (a reason that any bank still alive would not give them a loan when things were getting bad). Ford also still has a lot of debit, and so did Chrysler, so its not just a GM thing. GM just happened, as being the largest automaker, the most debt.
GM could not get the money they needed to keep vehicle development going, keep the lights on, and pay the bills. They were given money to keep afloat till the next administration could figure it out.

Hind-sight:
You could say that keeping the old brands is what put GM where it was. GM should have started to shed brands quickly once its market share could n o longer support it. GM was too full of pride to do that. Olds should have been cut loose in the 80's. As the market got smaller, the room between the brands disappeared. By the mid 90's, and market share dipping now into the 20's, it should have dropped more brands. But with the SUV craze, it gave GM more reason to find brands that make more trucks.

Originally Posted by SmokingSS

from what i remember reading, Saturn was in the red from day 1, that was a company that never made money for GM.

Im sure Al will be able to verify or dismiss that.

Saturn did make money for a few years, want to say mid 90's. It was really amazing that GM was making any money off any sedan! Especially a brand like Saturn that had no history, its unique high tech plant, doing the things they were doing.
Chevy killed Saturn, and there is no other way around it. Chevy stopped the development dollars going into making them better and keeping up with the imports.
Saturn's move upmarket was a noble one, but after 10 years of pushing saturn as the small, fun, plastic brand, it started to get more mainstream GM parts and chassis. It was the best time to own a Saturn with better cars, but the feeling was gone.
Old was a big money loser for GM once the 90's came. Olds payed for development of the Quad4, 3.5 Shortstar, and 4.0 mini Northstar. While the Quad4 made it to other brands, the 3.5 and the 4.0 didnt, so Old had to take the hit. Both of those motors were supposed to be an across the board engine. It didnt make it out of Old.
Same with the Aurora platform. High quality, but too expensive.


So yes...GM would be in the same place, probably worse, then if they kept the brands. FYI, Pontiac was slated to die in 2013, but was rushed foward as BK became more of a reality.

[LTb1ow]

So yadda yadda you are a GM fanboi is all I got from that.

[S.J.SLEEPER]

HOLY CRAP BI-GAL !!!!

All I have to say is that yes saturn good idea, saab nah, hummer yes cause it was a great seller,

Gm really shot themselves in the foot getting rid of the caprice. every cop I know loved the caprice and hated their crown vics or marquis cars.
How much $ did gm lose with not sellling all those popo cars?

and I am sure that they could have just made a limited amount of camaro/trans ams instead of killing them. if you made a limited amount , possibly would be worth more and more desired since hard to get.

and obvouisly gm lost fbody sales to mustangs cause ford had them on the lot, so it was either a pos cobalt or a vette, no middle of the line.

[BarneyMobile]

Originally Posted by S.J.SLEEPER

HOLY CRAP BI-GAL !!!!

All I have to say is that yes saturn good idea, saab nah, hummer yes cause it was a great seller,

Gm really shot themselves in the foot getting rid of the caprice. every cop I know loved the caprice and hated their crown vics or marquis cars.
How much $ did gm lose with not sellling all those popo cars?

and I am sure that they could have just made a limited amount of camaro/trans ams instead of killing them. if you made a limited amount , possibly would be worth more and more desired since hard to get.

and obvouisly gm lost fbody sales to mustangs cause ford had them on the lot, so it was either a pos cobalt or a vette, no middle of the line.

Good thing the "cough G8 cough" Caprice is making a come back. Lately GM has been selling Impala and Tahoe police vehicles like mad. I can't wait to see how the Caprice holds up since its designed for police duty. I can tell you that the Impala has to be one of the worst police cars but the Tahoes are just flat out bad a$$ and take the abuse well

[maroman88]

tahoe 9c1 FTW... cop in my town has an old square body style one as his personal car

[BigAls87Z28]

Originally Posted by S.J.SLEEPER

HOLY CRAP BI-GAL !!!!

All I have to say is that yes saturn good idea, saab nah, hummer yes cause it was a great seller,

Gm really shot themselves in the foot getting rid of the caprice. every cop I know loved the caprice and hated their crown vics or marquis cars.
How much $ did gm lose with not sellling all those popo cars?

and I am sure that they could have just made a limited amount of camaro/trans ams instead of killing them. if you made a limited amount , possibly would be worth more and more desired since hard to get.

and obvouisly gm lost fbody sales to mustangs cause ford had them on the lot, so it was either a pos cobalt or a vette, no middle of the line.

Saab was Gm's way into Europe.
Caprice was a good car but with no retail outlet its a money loser.
The 4th Gen was not going to pass 2003 crash standards so that's why 2002 was its last year
I don't know of anyone that got rid of their 4th Gen and got a new mustang. GM didn't lose sales it never had. Mustang appealed to more people with the 05.
GM is sure doing a pretty good now that camaro is back. January marks 8 months of Camaro on top.

[S.J.SLEEPER]

Originally Posted by BigAls87Z28

Saab was Gm's way into Europe.
Caprice was a good car but with no retail outlet its a money loser.
The 4th Gen was not going to pass 2003 crash standards so that's why 2002 was its last year
I don't know of anyone that got rid of their 4th Gen and got a new mustang. GM didn't lose sales it never had. Mustang appealed to more people with the 05.
GM is sure doing a pretty good now that camaro is back. January marks 8 months of Camaro on top.

i was saying that new buyers looking for a sports car...... had either cobalt or vette, no middle line like camaro/transam. so I'm sure some went and bought a mustang before they considered the cobalt as a alternative since the vette would be way out of price range.

and as for the caprice.... yes poor seller, but why nix it. just produce the police package. I would think its easier to run the program&tooling for a car they build then just nix it all together and make no $ with it.

I don't know, I'm not big corporate minded. can't make sense of alot of things, like why did wawa get rid of chili & cheese for the hot dogs and no more saur kraut. ok not a big seller, just limit the amount you make everyday to the size portion that sells on the average, why nix it and piss people off? their hot dogs suck but when I'm hungry I'll grab one with kraut . not anymore, now I don't buy them at all.
I'm sure its me and maybe 10 other people/day @ each wawa. @ 2000+ locations
thats $15/wawa per day or $30,000 per day combined or $900,000/mth combined

I think thats alot of $ to chetcan

[BigAls87Z28]

Yeah, but it costs more to make it and ship all that stuff to the individual stores, and when no one eats it, its thrown away. So, figure while it might cost them 30k in customers by not having it, they are saving 50k per day but not having it.

Im sure that Mustang took some people looking to buy an American sports coupe, but to be honest the Camaro and Trans Am were not the GM coupes that were cross shopped with the Mustang. The #1 GM car most cross shopped with the Mustang was the Grand Am coupe. So you could actually say that the loss of the Grand Am hurt GM more then anything else.
The G6 was GM's midsized coupe for a long time. I hope that with the next generation, we can expect to see a Malibu coupe. Something different then Camaro, offering a different type of coupe. Capture the handling, but offer a bit more comfort over Camaro.

The Caparice's platform was probably being readyto be scrapped. Police deptarments were asking to just keep the plant open to make the Caprice cop cars.
It seems they all take turns at making the fleet cars.
Being in the city today, the Impala's are outnumbering the CV's now, but there are several Nissian Atltima Hybrid and even Prius NYPD cars on the road. I saw the Prius hauling ass down 9th, lights blazing.

[gtaproject]

There is an entire cost and competition aspect of the situation, too. Not picking sides in the union/anti-union debate, but escalating healthcare and pension expenses being covered by fewer workers was a huge hit to earnings. Throw in lower returns on the pension assets as the higher risk/higher return investment options tanked, and huge amounts of funds were diverted away from development and to these legacy obligations. Also consider CAFE and the company being forced to build small vehicles that could not be profitable given the high fixed cost structure. So in a way, GM didn't want people to buy small cars. If you lose money on every one, you don't make it up in volume (that's a little joke). Consider the long-term effect of not being competitive in the small car market. Those are first time buyers and the long and short of it is that the domestic manufacturers basically told the market, "go buy imports vehicles until you are ready to spend $30k+ on an SUV or luxury car, and then we'll be here waiting with something to show you." What happens if a buyers owned an Corolla, then Camry, then is ready for something bigger as they have become more affluent and their family is expanding? Now you are in a dogfight for those dollars - the competition now has resepctable offerings in every segment and probably beats on price and (perceived) quality.

I started to consider bankruptcy inevitable back in 2004 as I thought the suburban dad pick-up/two-child-family Yukon fad had overstayed its welcome. Seeing the dependence of the company on these vehicles meant a quick spike in gas prices would have a multiplying effect on a trend that was just waiting to be put to pasture. If the market shifted to smaller vehicles - even if overall industry volume stayed the same (which it didn't) GM was screwed. The only way they could have avoided bankruptcy was if you aligned all the best-case scenarios and froze that moment in time infinitely.