Saturday, March 21, 2009

How To Save GM

Here is the least surprising headline of the week: GM, Chrysler May Need More Aid Than Requested, Rattner Says

General Motors Corp. and Chrysler LLC may need “considerably” more than the $21.6 billion in aid they requested, which was based on optimistic recovery plans, said Steven Rattner, the Treasury’s chief auto adviser.


The task force will give its “sense of direction” by March 31, Rattner said. The companies have received $17.4 billion since December and asked for the additional $21.6 billion in aid last month, an amount that depends on achieving turnaround plans that are “somewhat ambitious,” Rattner said.

By "somewhat ambitious," I think he means "somewhat ridiculous."

You know what's the funniest thing about these "talks" between the gov't and GM & Chrysler? The conversation always revolves around these questions: how should the car companies deal with the UAW? How much of the retiree's pension and healthcare costs should the companies still shoulder? How much of a haircut should the bond holders take? What about the dealers? And, what about all those suppliers? And, so on.

You know what no one ever asks?

What kind of cars should they be selling?

Oh, I know. There's always vague talk about "green" cars, and the like. Great, we'll drive those to our cloud cities, if jetpacks haven't become commercially available. No, I am talking about is what cars should GM sell this year and next (2009 & 2010) to get itself out of its hole. You go to war with the army you have, and GM has to save itself with the products it has on hand right now. So what should they sell? (I am leaving Chrysler out of this discussion because it really ought to be put into a BK). Neither GM management, nor the smart guys from the auto task force seem to have a clue.

Well, luckily for them, the answers to their problems just appeared in mailboxes all across America - it's the Consumer Reports 2009 Car Guide. Looking through it's pages, you can instantly see what GM's product problems are, and what they should do to solve them. 

That GM's product line is bloated is well known, but you can't see how bloated it is until it's laid out on the page. GM sells about 45 vehicles. By contrast, Toyota sells 26; Ford sells 25; and Nissan 20. Honda gets by with a crisp 15. And even, though GM sells nearly twice as many cars as its rivals, its product line has little variety. To the casual observer GM seems to sell big SUV's, big sedans, and the Corvette. The crack about SUV's is no joke. GM offers 15(!) SUV's, 11 of which are designed to carry 8 adults. 

The rationale for all this bloat is that it allows GM to offer the widest variety of vehicles to fit the widest variety of lifestyle. Aw, that's nice. But, that's not how it's worked out. Most, of GM's SUV's and sedans are little more than rebadged versions of base Chevrolet models. GMC and Pontiac, to name two, have little in the way of a distinct brand identity because of this practice. 

A related problem: GM's quality control is wildly inconsistent. It makes some good cars, especially Buicks and Cadillacs. But, it also makes lousy ones, like most Pontiacs and Saturns. This tends to drag down the reliability rating for whatever good cars GM might have on its lots. 

So, what's the Free Will Rescue Plan? First off, GM should slim down to Chevrolet, Buick, and Cadillac. I will allow Pontiac to carry on, but only to sell performance cars. No more Aztecs! 

Second, GM needs to do something about their seats. Last summer, I test drove some Chevys and was amazed at how uncomfortable the seats were. This might be a personal idiosyncrasy.

Next, we will go through the Consumer Reports Car Guide and find 22 cars that GM can sell. Those cars that are from dead brands can simply be demarcated as Chevys, Cads, or what have you: 

Small Cars: this is GM's weakest segment, with very little to choose from. Is it really that hard to come up with a decent economy car?

Saturn Astra: GM's only hatchback

Pontiac Vibe: a twin of the Toyota Matrix, and a good urban car.

Chevy Cobalt: an OK small car 

Sedans/Family Cars: 

Buick Lucerne: a big comfortable sedan that is also impressively reliable.

Chevy Malibu: one of their best vehicles, and an impressive attempt to compete with the Camry and Accord. 

Chevy Impala: a big relatively low priced family sedan for regular folks. 

Luxury Cars

Cadillac CTS: an great American luxury performance sedan that is reasonably priced. 

Cadillac CTS-V: a sinister looking monster with a wicked engine growl. 

Cadillac DTS: a handsome executive car, although its a little pricey

Sporty Cars

The Chevy Cobalt SS Coupe: I like coupes, sue me, and this one is a good low cost performance car.

The Corvette: duh. 

The Chevy Camero: performance glamor for the common man. 

The Pontiac Solstice or The Saturn Sky: pick one. I am partial to the Solstice 

SUV's: as I said above, GM makes too many, but that doesn't mean GM should stop making them. They just need to make the SUV line more rational. 

Saturn Vue: GM's "smallest" SUV. 

Chevy Equinox: An OK mid-size SUV. Needs to be a little smaller.

Chevy Traverse: the closest GM has to a mini-van

Chevy Suburban: GM, you are allowed to make one large SUV. History, and the state of Texas, demand that it be the Suburban. 

Hummer H3: Yeah, yeah. I know. Look, the Hummer - for all of its faults - is still an impressive piece of consumer tech if you are looking for an off-road vehicle. What makes the Hummer brand ridiculous is that so many people used their Hummers as commute vehicles. GM's advertising has already switched to emphasizing its "sport utility" qualities, and for that, the H3 is a uniquely desirable vehicle. 

Pick Ups: I know nothing about pickups, but I do know that this is the one segment where GM is a market leader, so I won't rock the boat. I will say, "Bring back the El Camino!"

Chevy Avalanche: one of the most reliable pick ups on the market

Chevy Colorado: not really a reliable, or up to date, pick up according to Consumer Reports, but you need a small pick up, and this is what GM has. 

Chevy HHR: I see a lot of businesses around town using this as a utility vehicle. It seems better suited to this, than as a pseudo-station wagon. 

Chevy Silverado: duh. the Corvette of pickups 

So there you have it. 22 cars, each one being reliable and serving a particular purpose. And, choosing cars is a lot more fun than negotiating with bond holders!

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