I Love Cars

This page provides a compilation of selected articles written about the auto manufacturers and associated challenges.

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Motor City Challenge: “Failure Is Not An Option”

GM Entering Bankruptcy and Chrysler Poised to Exit

Reading the Wall Street Journal or watching the nightly news makes it seem inevitable that GM will enter bankruptcy soon. This is not an unexpected event as reported in the Tribune over the past months. Chrysler appears to be on the verge of coming out of bankruptcy, and this is one fast trip in and out! GM is too complex for a speedy journey like Chrysler.

Deadly Symbolic and Deadly Serious

In some ways this is symbolic and in some ways it is deadly serious. Looking at the deadly serious side GM absolutely must be re-cast properly for the good of the US and all of North America if you take the proposition that GM is worth saving and the Tribune takes that position. However, re-casting GM is not simple from the business plan side of the equation and it is imperative that the new business plan must “hold water” otherwise the entire Government assistance plan is flawed. The New GM absolutely must have a viable business plan.

Chrysler will be looking to Fiat for engineering and product development. This will happen quickly and if gas prices continue to rise, and they have gone up significantly in the past 6 months, then the Fiat product line will be embraced by economy and sport minded consumers. Fiat has some great cars in Europe, such as the stunning 500, and these cars will be successful with higher gas prices. If oil gets back to $75 per barrel then Chrysler-Fiat will have a reasonable playing field for success.

Ford is Doing About Everything Right

As we have said before in the Tribune, Ford is America’s Premiere Car Company. All Ford really needs is for the economy to bounce back and auto sales to pick up. Also, Ford has some great product in the pipeline including their Eco Boost high performance engines. Lots of additional power from the smaller powerplants means better performance and continued good fuel economy.

Brutal Media and Press

GM is going to be the target of some very brutal press and media. Crystal Ball Gazing would likely say that after the bad press there will be some good press. With so much Government money and business leadership coming to GM then the ultimate result will likely be a successful re-birth of GM.

“Failure Is Not An Option”

Restructuring GM is a capitalistic risk that requires a positive outcome. To quote NASA “Failure Is Not An Option”.
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“If it’s good for GM it’s good for the Country”

This is a classic paradigm statement that quickly polarizes everyone. Originally quoted by Charles Erwin Wilson defense secretary for President Eisenhower in the 1950’s. Regarding this statement and your opinion, you fall into one of two distinct groups. GM is either very significant and should get Government help or GM is pretty much worthless and should go away.

The Automotive Tribune is of the position that GM is unique to the US with direct and indirect values so great that it must be saved. Major US based manufacturing is vital to the long term business and industrial health of the Country and that is why GM must be assisted through the current crisis.

Looking forward 5-10-50 years is the only way to get a realistic perspective of the importance of GM. However, looking back 100-50-10-5 years gets us to today. History provides a very real view that puts a strong foundation in place to support GM assistance. One fact that is absolutely clear is that GM has been off its core automotive track for a terribly long time and being off the core automotive track has caused a train wreck. Today, only the US Government can put GM back on track.

Industrial Education

History is a good word and the study of history helps to provide a basis and foundation for society today. Education, at all levels and in all cultures is respected for how and why it helps individuals and society. Industrial history education or simply industrial education is the study of tools, materials, processes, products, and problems associated with building things. Industrial education also deals with the larger scale issues associated with the who, what, when, where and why issues that shaped the broad scope of industrial activity. Industrial activity has built the infrastructure for the industrialized world that you live in today. You live in a house, drive a car, turn on lights or water, use the phone or television, visit the grocery or physician, breathe polluted or clean air, these are all facets of industrial society that represent direction that society wanted to have take and today you live in an industrialized world.

Industrialized World

People did not always live in an industrialized world. In broad terms when farmers got productive with agriculture to produce more food than they consumed some people could go to work in industry outside of farming; this is referred to as the transition from an Agrarian Society to an Industrial Society which started in the 1800’s. Government leaders recognized how important education was for both agrarian and industrial sectors so the Morrill Land Grant Act was passed in 1862 to set aside land that would be used to support education in the US and establish agricultural and mechanical university programs in each state, a process that provides financial support to the State Land Grant Universities.

Agrarian to Industrial

Industrial goods and services with increased productivity meant that fewer people could provide more food for society which permitted more people to enter the industrial work force to produce more high-value goods and services. Industrial output grows, financial output grows, and society as a whole gets richer.

Industrial to Information

In the 1950’s and 1960’s the transistor was invented. In its simplest definition a transitory could be though of as a very small off-on switch. Adding more transistors permitted computer software and hardware to utilize programs to make decisions. Contemporary terms such as computer programs, artificial intelligence, algorithms, Moore’s Law, personal computer, space travel, text messaging, and wireless represent some items that affect everyone to some extent each and every minute of evert day.

Getting To Today

Without Detroit the US would have lost WWII. Without North American industrial production WWII could not have been won. Allied forces used the industrial products of planes, tanks, ships, jeeps, guns, parachutes, electricity, oil, atomic weapons, and cigarettes to win the war. Some products were great and some not-so-great. Allied forces won the war. Axis forces were very good and resourceful but they ultimately did not have the available resources necessary to win the war. Germany did remarkable things in many areas including jet aircraft and synthetic fuels production to power their war machines but these activities did not win the war for the axis powers.

Post WWII Politics

Europe and Japan were re-built. A “Cold War” nuclear arsenal triad of mega-powers developed with China, Soviet Union USSR, and the Free World. USSR collapses and OPEC grows in significance to significantly influence the world oil supply which directly affects stability of the industrialized economies.

Energy Victory by Dr. Robert Zubrin

One of the most significant books in modern times is Energy Victory by Dr. Robert Zubrin published in 2007. I met with Dr. Zubrin last year and found him to be a highly motivated and successful man who has many years experience in various scientific programs including the US Space Program. Dr. Zubrin chronicles the developmental history of middle east oil and Saudi Arabia from the mid 1700’s and early 1800’s and how Saudi oil money has a direct link to politics in the US and international terrorism.

On the book jacket is a quote from James Woolsey, former director of the Central Intelligence Agency “Robert Zubrin pulls no punches and moves effortlessly from a fascinating oil-centered take on WW II to making the mathematics of oil alternatives intelligible to lay readers. Oil and hydrogen take huge hits and alcohol fuels win big. Don’t miss this one.”

WWI Politics

Archduke Ferdinand was assassinated which brought Austria and Serbia into conflict and because of mutual support agreements Germany and France were brought into the war which then resulted in Germany, Italy, England, Australia, Canada, Japan, China, and the United States along with many other countries being involved. World War I started because of an assassination.

Today’s World and Tomorrow’s World

Post WWI politics unfortunately set up the foundation for WWII. Post WWII set up the framework for today’s world. OPEC is a natural resource controlling group that affects everyone reading this article. Terrorist groups demonstrated their effectiveness on September 11, 2001. Pakistan has nuclear arms and Pakistan has a radical presence that is trying to control the country.

What is clear about world society is that major events are occurring and that major things will happen. Some major things will test or threaten all developed and industrialized societies.

Getting GM on Track is in the Best Interest of the United States. There are serious problems associated with getting GM straightened out. GM’s industrial capability is a strategic national asset that must be preserved. Bringing the top business, economics, labor, technology, visionary, and governmental minds together can establish the Business Plan necessary for GM to be successful in the decades ahead.
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Chaos Brings Opportunity — In The Real Graduate Business School

If chaos brings opportunity then current circumstances present a multitude of opportunities in the car business. Undoubtedly, present circumstances represent a set of issues absolutely unforeseen except in a Graduate Business School program. Even there, variables that have brought on the current situation would have represented a set of circumstances that would be almost unimaginable.

An Unimaginable Scenario Even In Business School

If today’s situation were visualized as a raging river that needed to be crossed then the raging waters would include the economy, weak demand, and industry collapse. Players crossing the river represent an intrepid and diverse group and these players are crossng the raging waters right now because either they must or they see opportunity. Some group members chose this pathway and some had no choice but were swept up in the torrent and some did not have any opportunity but to participate or see collapse of a strategic industry in the US, North America and World.

Is It Academic and Historic

Two decades ago the scene was set for a massive business takeoverthat became the story memorialized in Barbarians at the Gate written by Bryan Burrough and John Helyar describing a massive Wall Street and Industry economic power play.

This masterful work memorialized how financial minds envisioned and executed maneuvers to control huge financial sums and industries and has been called one of the most influential business books of all time — the definitive account of the largest takeover in Wall Street history. This tomb addressed a facet of business that was totally dominating or crushing depending on which player you study.

Auto Industry Reality Is Not Academic

Today’s auto industry reality makes Barbarians seem to be only a prelude to the real business, industry and governmental drama. Reality composed of GM and Chrysler collapse, dealers terminated in a wholesale manner, UAW rethinking just about everything, US Government input to business plans, car lines being shut or sold, key players and groups stepping up to acquire select assets. These circumstances are absolutely beyond Graduate School Business Class 633.

The Real School of Hard Knocks

Current status of the US and World auto manufacturing is absolutely hard ball. There are massive implications for current Corporate and National priorities around the Globe.

Significance of the current situation has implications which go far beyond today’s immediate chaos. Decisions made in 2009 will very tightly set the course of the Global auto industry tightly for the next five (5) to seven (7) years and set he paradigm for long term future.

Massive changes are going to happen in 2009. Stating that another way, a hundered years ago was the foundation fr what is in place today. How far into the future the survivors and new players go remains to be seen. However, for the next hundred years, or at minimum couple of decades, decisions made in 2009 will play a seminal role in automotive manufacturing dominance.
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Chrysler Will Survive

It has been a long slide but Chrysler has now started Bankruptcy Reorganization. There are three stories here: A) past, B) present and C) future. Each story is different but with a common thread.

Every Car Guy has an opinion but right now politicians, governments, business executives and selected experts are establishing a new direction and putting into place a new company. Everyone has apprehension about the future of Chrysler. Only after the current state of chaos is over will the Car Guy and Gal be able to assess a rebuilt Chrysler. A lot of people want success. Success for the Car Guy is defined as Product Available. If you like Chrysler you want Great Product; No More and No Less. Great Product wins in the marketplace.

Present Chrysler — The Storied Phoenix

Fiat will control the ultimate future and product destination for Chrysler. Control could be viewed in two ways, one good and one skeptical. Given Fiat’s successes in Europe, especially with the 500 (a Mini derivative) the product side for cars is promising since Chrysler cars are dismal according to the Automotive Press. Ram trucks and Jeep are successful and these should not see any significant change other than a gradual morphing of powertrain and body style to reflect contemporary trends.

Unions, Governments, Legacy Costs, Dealers, and Suppliers will all have a say in the re-birth of Chrysler. Each group has their own turf to defend.

Movement in the restructuring will flow from the Governments down to the Dealers and small Dealers will be eliminated, even if they have decades of commitment to Chrysler. Small Dealers stand to be the single most storied and neighborhood loss. Termination is terrible for the Small Dealer but going forward with Chrysler provides no other option.

Future Chrysler — Competitive and Supported Anew

New product and new support. Maybe not quite like a cigar chomping Lee Iacocca but definitely a new car company that will have a lot of supporters because of what it took to make the new company. Supporters who have a new and high dollar investment in the new company.

Chrysler Past

Any company that has history elements spanning from the Chrysler Building in Manhattan to Hemi Engines has created a storied past. Personalities from Walter P. Chrysler, the Dodge Brothers, to Bob Lutz and Bob Nardelli bring together unique champions. Many books have been written and many more will be written. Car guys enjoy and respect the Product.

Car Guy Future Vision

By 2010 all of the current chaos will be behind. Product is King in the dealership. We will enter 2010 with a vision of what is coming. Trucks and Jeeps will hold their own. Cars will be the real focus for the future and it is up to the Engineers and Designers to deliver on a product future that the Customer wants to purchase.

Much will be in the media and press about the new Chrysler product. Hopefully, there are not too many cooks in the kitchen that will spoil the product! Given the ultimate significance of the new product there is a very strong probability that it will be competitive in the marketplace.

Competitive Future

A competitive future is what Unions, Governments, Legacy Concerns, Dealers, and Suppliers all want with the new Chrysler. The next chapter in the Chrysler story is being written every day.
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GM Is In Auto Industry Chaos

We have continued to follow the saga of GM and Chrysler as they attempt to find direction and a method to be successful automobile manufacturers.

Success for 2009 is defined many ways but this article will focus on two of paramount importance to the Car Guy – Product & Dealers. One success track is providing Washington a written game plan on how they will be successful. When the plan is approved, and funded, then each plan will have to be implemented. Plan implementation represents a several year commitment and then Proof Is In the Pudding will tell the world, and Washington, if the plan works. This is definitely not going to be a quick process.

Chrysler has their own set of problems and the Government has given them only one option for survival and that is a forced marriage with Fiat. This is not a bad thing. Fiat has significant strengths and a synergy with Chrysler would permit a full product line to come to market.

General Motors has a much more difficult situation. The Tribune has continued to follow the GM Saga with an article dealing with the Reorganization Opportunity and then again looking at GM’s position at 101 Years Old.

With the key foundation issues clearly identified our immediate focus will shift to Product and Distribution. Product can be defined as what comes out of the manufacturing plant and Distribution can be defined as where you get the product. From a definition standpoint Product is simple. If it gets to the back door of the plant then the manufacturer is probably glad that you have the opportunity to purchase it. If you do not purchase product then manufacturers rent space to park the product. You have probably seen photos of acre after acre of new cars just sitting or you have seen your local dealer’s lot overflowing with product. Neither of these visual images is consistent with a balanced inventory.

Distribution to the consumermeans that the car goes through a dealer. The factory sells to dealers and dealers sell to customer. You buy the car from a dealer. GM reported that it had about 6,375 stores in January with 3,780 Chevrolet, 1,080 Pontiac, 550 Buick and 400 Saturn. Automotive Tribune believes that GM should look closely at the Toyota model which has about 1/2 as many dealerships that sell an average of 3,500 new vehicles a year in California. Automotive News reported on January 25, 2009 that a GM spokesperson said that in the plan GM submitted to Congress they wanted to reduce the Dealer count to about 4,700. This might not be quite Toyota, but it certainly would improve that all important cash flow to the dealers.

Moving the clock ahead and with GM dealer count down, then what types of vehicles will GM sell? Chevrolet, Cadillac, and Buick are our favorites in this race. Let’s take a look at the not-so-successful franchise picks. Note, this is crystal ball gazing so if have a different opinion then that is fine too.

Saturn is dead unless something remarkable happens and it is real unfortunate since they have an excellent product lineup

Hummer is dead. That looks to be pretty historic.

GMC Truck should be dead. It seems to have the same product lineup as Chevrolet so GMC can go.

Saab is dead. It never achieved the market share that had been hoped for. A decent car that the public just never wanted. It is history in the GM Rear View Mirror.

Pontiac will shrink to a couple of cars onto a Corporate GM lot.

Oldsmobile ceased production in April, 2004. If GM could figure out a good Oldsmobile product then maybe a good Oldsmobile car would be a good idea. In 1985 Oldsmobile sold over 1,000,000 vehicles. Today GM’s market share is about 22%. If 10,000,000 vehicles sell in North America and GM sells 22% then GM sells 2,200,000 vehicles. Olds at the high point would have represented about 45% of total production GM production today if we get creative with the math and push the numbers around. The point of this exercise is that Olds had the right product at the right time. Unfortunately, Oldsmobile and GM did not adapt with the time to provide the type of product that the public wanted to purchase.

GM will have a Federal Restructuring Plan in place this summer. The real question is whether or not GM can get organized to provide the type of product that customers want to purchase and drive. GM has some winning products and every new GM product must be a winner such as the 2010 Camaro.

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GM Into The Next Century

There is a very strong probability that a reader of the Tribune is an automotive enthusiast, otherwise it is pretty unlikely that you would be following along with this gear-clashing chaos that is breaking out between Detroit and Washington. Today the top story in the Wall Street Journal and the Nightly News have the lead story about Mr. Wagoner being let go by Mr. Obama. From the Tribune’s position that makes total sense because reflecting on history associated with the Titanic, just ask yourself if Captain Smith would of deserved a bonus for hitting the iceberg? Well, Mr. Wagoner’s company has continued to lose about 1% market share since he became CEO in 2000.

Last month the Tribune reported about the GM crisis.

GM’s Board of Directors is also in the same, deer in the headlights, mentality. There have been some strong personalities, such as Jerry York, but using a consumer product mentality for a car will not incrase sales.

Your Editor thought it was appropriate to include a few photos from the September 15, 2008 Commerative Edition of Automotive News which had 100 articles that documented the 100 years of GM, titled at the bottom of the page How General Motors Changed the World. That statement is absolutely correct, GM has changed the World.

Looking at the graphics points out the GM slide or plunge. I keep reflecting back on attendance at the Annual GM Shareholder Meeting a couple of years ago. There was no sense of urgency or crisis. This basic fact, no sense of urgency or crisis,is why GM and Ford are two entirely different companies and Ford gets the credit for recoginzing that they were going down and they had to drastically change.

Where is GM going now. Washington is going to re-cast GM. Could that be bad or could that be good? The Titanic after impact with the iceberg then … the rest of that story we know. GM must be re-structured and it needs a new Board of Directors. Re-structure and new Board are tall orders but that is the only way GM can return to profitability. Some strong and accomplished personality types could help right now including: Lee Iacocca, Roger Penske, Mike Jackson, Bob Lutz, Bill Ford, Henry Ford III, Kirk Kirkorian, Jerry York, Brock Yates, and Csaba Csere who recently left Car and Driver.

Roger Penske – CEO and Jerry York – Chairman would be the optimal executive group. There would be no shortage of real leadership and with the rest of this successful group hard at work then “Government Motors” would have a real shot at taking on Toyota.

 

 

 

As a GM product line, Saturn is on the ropes. There are some strong players that would like to acquire Saturn. It is only appropriate to recognize that Saturn has some really great product on the dealer’s lot today. Unfortunately, the public either does not know it or the public is not interested in buying the cars, hence the sales slide.

On GM product blunders, there is the Pontiac Aztec which was voted one of the 50 Worst Cars of All Time. Many of us in the automobile industry said that there could never be another Edsel which had been recognized as one of the biggest automotive failures of all time. We felt that with the proper marketing and media budget there could never be another failure like the Edsel. However, the Aztec proved us wrong.

Why did the Aztec prove us wrong, should you ask? The Aztec had the opportunity to build on decades of successful failure associated with Badge Engineering. However, the Aztec broke the mold for bad design; not necessarily a bad car, but a bad design. Some badge engineering cars look good including this 1985 Chevrolet Monte Carlo SS

Badge engineering can be seen in GM dealerships by looking at the Chevrolet Vega and Pontiac Astre in the 70’s. Then there were the J Cars in the 1980’s that included Chevrolet Cavalier, Pontiac Sunbird, Olds Starfire, Buick Skyhawk, and Cadillac Cimarron. Additionally, GM did the same badge engineering to virtually every car type they produced. The same front wheel drive chassis was badge engineered for all 5 GM divisions. For the customer or enthusiast to point out that only minor trim differences existed between Chevrolet and Cadillac products was an observation that never made it to the 14th Floor however this observation was made every day on the showroom floor.

 

 

 

For GM to be successful going forward the business model must make sense and the company must produce cars that the public wants. With Washington in the driver’s seat then there is a very real possibility that GM may never again produce cars that are serious excitement. They may be great reliable cars that people buy lots of but with no real driving passion … sort of sounds like Toyota. Earlier in this article the Tribune concluded that the Toyota Model was important, for a number of reasons.

Good Luck GM, 100 years in the record books. You have to get through year 101 if you are going to make it through the second century,
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If a Higher Power could intervene on behalf of GM and bring back a few additional Board Candidates definitely on the list would be Ed Cole, Harley Earl, Zora Arkus Duntov, Henry Ford, and Walter P. Chrysler. This is a very diversified group. Lee Iacocca would be in charge of the Director Introduction Meeting.

 

 

Where does GM go in the Next 100 Years?

With proper leadership GM can 1) return to profitability, 2) produce cars that the public really wants, 3) deal with legacy costs, and 4) deal with dealer network. A quick look at the Toyota model points out a successful direction to pursue. Hopefully, GM’s cars built by looking at the Toyota model will be more exciting.