GM brings on the strippers

The tide goes back out...

The tide goes back out…

In a 2011 interview, Bob Lutz summed up the product philosophy that guided the product turnaround GM had hired him to lead as follows:

The product development guys, whether at Ford, BMW, Chrysler or GM, liked my leadership because I insist on good rather than cheap. And it’s definitely paid off. The average transaction prices of GM cars are up so much it more than offsets, way more than offsets, the maybe thousand bucks I put into the vehicle.

Lutz’s argument, that it is better to buy market share by investing in quality than by discounting, is unassailable in the abstract and absolute catnip for car writers (myself included, at the time).  And given the profound mediocrity of GM’s products before Lutz joined GM in 2001, it’s impossible to argue that his philosophy hasn’t had some kind of positive effect. As Lutz pointed out, GM had seen transaction prices rise throughout his tenure… but that trend appears to have turned.

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GM’s “Award-Winning” PR Strategy

Cui bono?

Cui bono?

For as long as General Motors has been losing market share in the United States, Detroit’s largest automaker has looked beyond mere success on the market to craft a winning PR narrative. This has been no easy task; after all, nothing succeeds like success. But luckily for GM there is an alternative to actual success: awards. Offered by countess media outlets, professional associations and industry groups, these awards may not actually substitute for (let alone drive) consumer demand for GM’s products, but they do allow the Ren Cen’s merry spinmeisters to craft an appearance of success for the company, no matter how at odds with reality it is.

History is littered with embarrassing legacies of this strategy, perhaps most notably the time when GM won Motor Trend’s 1971 Car Of The Year award for its hapless Chevrolet Vega. But GM’s awards-centric strategy is hardly a thing of the past: just last week, CEO Mary Barra claimed that recent awards prove that GM is indeed a new company and that “we are there to win.” Barra’s statement was deeply ironic, as touting award wins as a sign of success is precisely the kind of “leadership” that allowed GM to ignore its failures on the market for decades. In fact, under Barra’s leadership GM is not simply falling back on awards to burnish its underperforming vehicles, it’s relying on awards to polish Barra’s image as well. Worst of all, it appears many of these awards are effectively bought and paid for.

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GM Korea: The Twilight Empire

I met a traveller from an antique land
Who said: “Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
‘My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away ~Shelley, “Ozymandias”

Ed note: Jordan Terry of Stone Street Advisors recently asked me on Twitter what I thought of the “bad” situation at GM Korea, noting that it seemed “underreported.” Having written about the subject in the past at TTAC, that was hardly a surprise: not much hard reporting comes out of GM’s “International Operations” black box. That said, there is a broader context here that is underreported, and which I will try to lay out here…

General Motors Korea, formerly GM-Daewoo, has been a key design, engineering and export hub for GM’s global empire since the early 2000s. Specializing in smaller cars, developed and produced at lower price points than GM’s European Opel division, GM Korea was the main conduit for many of GM’s developing-market efforts, as well as the “home room” for many global products. For the perennially small-car- and cost-challenged GM, Korea was the key to offering affordable small cars for export to developed markets like the US and Europe in complete form, as well as in the form of CKD kits for developing market operations like GM Uzbekistan and GM Egypt.

But GM Korea’s long-term problems with union unrest, currency volatility and domestic market sales declines are catching up to it, creating a financial crisis just as it becomes increasingly expendable to the GM Mothership. GM’s deep alliance with China’s SAIC Motors has made GM Korea all but irrelevant to its strategy, and as The General plots its increasingly China-centric future it’s clear that Korea is losing out. With the loss of key export markets and future development work, GM’s once-crucial Korean empire is fading into obscurity and financial woes.

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General Motors Ushers Australia Into The Post-Industrial Age

You just keep me Holden on...

You just keep me Holden on…

Amidst the copious news General Motors has made over the last week, one fully-formed and profoundly important story is doggedly evading the notice of the press. Overshadowed by the end of US Treasury ownership and the promotion of GM’s first female CEO, the demise of The General’s Australian unit Holden should not be overlooked. Not because the phenomenon it demonstrates is new… in fact it’s nothing more than the latest example of the GM standard operating procedure that has helped devastate local governments across America. Rather, the tragic turn of events in Australia sends a sharp warning, every bit as poignant as the recent bankruptcy of Detroit, to the American taxpayers about the company they rescued.

The Government Motors endgame is only just beginning…

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Chart: Volkswagen Hits The Wall Again In The US Market

Not again...

Not again…

When Volkswagen announced that it would attempt to triple its US sales between 2009 and 2018, my fellow Daily Kanban editor Bertel Schmitt greeted the announcement with a picture of flying pigs. Long a dominant force in Europe and Asia, Volkswagen has long struggled in the profitable US market, frustrating the firm’s efforts to become the king of the global auto game. But with a new line of lower-cost sedans and the firm’s first US plant since the Westmoreland disaster, VW put some real heft behind its latest assault on the most lucrative (if no longer the largest) market for cars.

And as of the end of last year, it almost seemed like the goal was within reach; with 438,133 US VW-brand sales in 2012, Stefan Jacoby’s long-ago 2013 goal of 400k-450k sales and a profit was as good as achieved. But with 2013 winding to a close with the auto market running hot on strong credit markets, VW’s goal seems to have suddenly evaporated. With 342,000 units sold through October, VW would need back-to-back record months to even crack 400,000 units.

Automotive News [sub] reports that, whith a flat spot in VW’s product cadence, dealers are getting angry. And sure enough, a look at VW’s core model sales reveals that the brand truly is on the “roller coaster” one dealer describes.

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