I guess my final post will be with these points followed up by an article I found yesterday:
- GM and Ford are losing money. What they're doing now obviously ain't working. I guess they have a choice to continue to do what they're doing; making cars people don't care much about, losing market share, or take a chance and offer a bare bones muscle car to see what the reaction would be.
- The Hummers are a success and it ain't because of the cushy ride and awesome fuel effeciency.
Problem No. 1: Making cars people want.
Knight-Ridder Tribune Business News
18 December 2005
[What follows is the full text of the article.]
Byline: Don Hammonds
Dec. 18--Despite massive cost reductions, General Motors and Ford are destined to struggle because they aren't making cars consumers want, says Brad Marion, an automotive industry analyst and senior client partner in the Chicago office of Korn/Ferry International.
"I'm not hearing anybody express optimism when it comes to Ford and GM," Mr. Marion said in a recent interview.
"They're taking the cost-cutting steps" -- General Motors plans to cut about 30,000 jobs and close 12 plants by the end of 2008, including a West Mifflin stamping plant, while Ford is expected next month to announce that it, too, will cut up to 30,000 jobs and close at least 10 North American plants the next five years.
"But everybody knowledgeable about their future product pipelines is suggesting that the boost of adrenaline and hope that you should get from new products are not there," he said.
By contrast, the nation's No. 3 domestic automaker, the Chrysler unit of Daimler-Chrysler, has introduced the PT Cruiser, Chrysler 300C and Dodge Magnum -- creative, "must-have" products that Ford and GM lack, Mr. Marion said.
It's true that the world's largest automaker's Cadillac division "has done a good job," but the problem is that GM is "surrounded by a lot of other stuff that's mediocre at best," he said.
As for Ford, its Fusion has potential but the automaker's other products have fallen flat, Mr. Marion said. "I drove the Ford Five Hundred and it wouldn't be high on my list of cars to go out and purchase. It's blah."
The problem at Ford, he said, is that continual management changes have made it risk-averse. GM, on the other hand, is hobbled by its sheer size, which creates a sort of bureaucracy that makes it hard to change, Mr. Marion said.
Cost-cutting and capacity reductions will help but should have been done a long time ago, he added. "Shame on the United Auto Workers and the auto companies for not dealing with the business realities of this situation before now. They both have accountability in where things stand today."
Ford lost $2.1 billion on a pretax basis for the first nine months of the year, while sales at the No. 2 automaker dropped 4.6 percent and its domestic market share fell to about 18.6, down from 19.7 percent a year ago. GM has lost almost $4 billion the same period, while its sales were off 3 percent in the first 11 months of the year and its North America market share hit 25.6 percent, down from 28.5 percent a year ago.
Standard & Poor's last week cut its corporate credit rating, already at junk levels, by two more notches to "B" from "BB-minus."
"The downgrade reflects our increased skepticism about GM's ability to turn around the performance of its North American automotive operations," S&P analyst Robert Schulz said in a report.
"GM has suffered meaningful market share erosion in the U.S. this year, despite prior concerted efforts to improve the appeal of its product offerings." He added that "it is now dubious whether GM's new models, set to be introduced over the next year, can be counted on to help restore the company's North American operations to profitability."
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