Wednesday, December 03, 2008

My Big Three Bailout Plan

Yeah, that's right. I'm laying out my plan to save the industry, but first, I've got some shit to get off my chest...

I've been mulling over a massive critique of the American auto companies for a while now...Ever since I went to the (Detroit) North American International Auto Show a couple years ago and watched as GM countered the onslaught of the Prius, hybrid Hondas and other kick-ass imports with the big unveiling of their updated GMT900 line of full-size trucks and SUVs (Silverados, Tahoe, Yukons, Suburban, etc.)

One year later, Dodge brought in a herd of cattle for their new full-size Ram pickup to "drive" through downtown Detroit. Putting aside the sheer stupidity of that stunt and lack of relevance of using the truck for actual labor, they were even further behind than GM.

Now I'm not saying all of those vehicles weren't a little long in the tooth, and didn't need a facelift—they did, and they are the best looking versions of those trucks yet—but GM (and last year, Chrysler) was betting EVERYTHING on these vehicles at a time when it was clear the Era of the Big SUV was winding down. They've made some admirable gains in fuel economy, introduced a hybrid Tahoe, but the fact remains they were behind the curve in a big way, and instead of investing in warm blood and fur, they poured hundreds of millions of dollars redesigning the dinosaur right before the Ice Age.



It appears they have learned that lesson now, when it is too late. GM has indefinitely suspended plans to redesign the line again, instead of the standard six-year lifespan. What brought them to that conclusion? Full-size SUV sales have plummeted 51% since they unveiled the 2007 models. The Trailblazer (mid-size SUV) sales fell 73%. And those numbers are from before gas prices spent the summer over $4.

One thing Detroit can clearly still do is rear-view mirrors.

Here's the thing: Two years ago, I knew those SUVs were going to be launched, and how fucking stupid a bet GM was making, but that's not what's most frustrating... It was going to the NAIAS this past January and seeing these cars:



What's wrong with those cars, Mr Furious?

Nothing. Nothing except the fact that in January of 2008 they were still fucking concept vehicles for GM! I'm pretty sure Toyota's been making money hand over fist in that niche with Scion since 2004.

All I could do is stare from offstage, snap my pics and wonder aloud, "Why the hell aren't cars like that in showrooms NOW?!?"

If I were on the Senate Banking Committee today, I'd ask Rick Wagoner why it wasn't some team's 24/7 job to get those two cars on the road by the end of the year. Seriously. And don't waste time blanding-down the design—those two cars are hot and would sell like crazy just as they are.

Which leads me to my first bailout requirement:

Fire everyone who looks at a concept car and says, "our focus group tells us that they won't like..." I bet there's a whole level of management jackasses in each division responsible for taking cool cars and turning them into Cobalts and G5s. History backs me up on this. The cars released in the last decade that made the smallest style jump from show floor to showroom were successful: The New Beetle, Mini Cooper, PT Cruiser, the current Prius. Next up? The Volt. They've already made the concept car look too much like a Stratus. Why is Detroit afraid to take a fucking chance? The Volt NEEDS TO look different. It's the first electric car. People who buy one don't want to be mistaken for Malibu drivers (and for the record, I think the Malibu is the best-looking Chevy sedan in forty years). Do you hear what I'm saying, GM? "Green" sells. Prius drivers aren't just saving gas, they're making a fucking statement driving around in that lozenge. All the hype around the Volt is going to deflate somewhat when that cool-ass concept everyone saw looks "normal."

Let me get to the real nuts and bolts stuff that needs to happen to save these companies. Trim the fat. And there is plenty of it. All of the Big Three have too much duplication across brands. Cut brands, and cut models:

GENERAL MOTORS

Buick—Gone. The loyal Buick customer base has to be pushing 70. Elderly people buying their last car ain't a plan for the future.

Cadillac—An upscale line is good. And I like the new "sharp edge" direction. Skews younger. Pick one full size sedan, I like the STS, so ditch the DTS. You can only keep the Escalade if every single one is Hybrid or DoD (Displacement on Demand—shuts off half the cylinders when not needed)

Chevy—Family cars, SUVs, pickups and the Corvette. That's it. Start making Hybrid Equinoxes. And goddammit, build a fucking station wagon again. No more Avalanche—stupidest idea ever. All full-size trucks and SUVs need Hybrid or DoD powertrains.

GMC—Gone. There is no need to duplicate with Chevy: Yukon=Tahoe. Stop building both. All commercial trucks are Chevys now. Why? Because the separate division has a whole layer of management that is redundant.

HUMMER—Gone. Just for symbolism's sake if nothing else, but that market is dead.

Pontiac—Because I like the Vibe, Solstice and G6 so much it's hard to let go. Pontiac can be the "sporty division" and those three and the G8 is their lineup. That's it. No SUVs or vans, and ditch the G5, it's ugly.

Saab—Sell it. Please. Let somebody in Sweden make cool, quirky cars again. GM trashed this once great brand the second they bought it, and I will go back to Detroit and kill someone if their mismanagement means Saab's demise.

Saturn
—Duplication is a problem here, but they have the best lineup in the company, run differently from factory to sales floor and as far as I know do well.


FORD MOTOR COMPANY

Ford—
Your website won't load, so you get nothing. Actually, here's what I want: The European Focus. Wagons and hatchbacks. Trust me.

Lincoln—
Again, and upscale brand is fine. Sedans only. No SUVs.

Mercury—A fetish for vertical grillwork is no reason to duplicate an entire line of automobiles. Good bye.

CHRYSLER

Chrysler—
Family sedans and minivans. No more Aspen. All trucks and SUVs are now Dodges or Jeeps. Limit duplication.

Dodge—Sporty cars and trucks only. All lame sedans (Avenger=Sebring) and vans are now Chryslers.

Jeep—Compass, Liberty or PAtriot: Pick one, lose the other two. Everything else is fine.

Note: In no way do I support a financial benefit for Cerberus, the holding company that owns Chrysler, until the company is back in the black and they earn a reward for their investment.

--

All companies need to start cracking on electric, hybrid and alternative fuel vehicles like fucking yesterday. Engine technology improvements have gone too far over towards power instead of efficiency. There is really no need for any average family car to be packing over 200 horses. Get that shit turned around.

No companies can pay dividends, and stockholders are holding the bag—I don't care if they take a bath. Top level executives forgo salaries until the loans are paid back. Their stock options should be compensation and incentive enough. Mid-level management should have been thinned with consolidation of brands and models, all salaries and bonuses are frozen.

Union wages freeze. Contracts are not opened up, but concessions can and should be made. Negotiations to alter terms for legacy costs should ensue.

ALL THREE COMPANIES NEED TO ACTIVELY PUSH FOR UNIVERSAL HEALTHCARE. When enacted, all employees top to bottom, plus retirees need to abandon company healthcare in favor of national plan. This single factor will relieve their biggest current and legacy financial burdens.

That's all I can think of now, and I'm tired. Get it done, you bastards.

8 comments:

Rickey Henderson said...

Saab—Sell it. Please. Let somebody in Sweden make cool, quirky cars again.

Amen! Bring back the 900 hatchback line!

Angelos said...

Superb post.

Rickey Henderson said...

BTW, Rickey heartily approves of you using imagery from the Creationist bible at the top of the post.

Bob said...

With all due respect Mr. Furious I am tired of arm-chair engineers/auto CEO telling GM what it should do.

You lost me here:
—but GM (and last year, Chrysler) was betting EVERYTHING on these [SUV’s and Trucks] vehicles at a time when it was the Era of the Big SUV was winding down.”

If it was so clear to everyone, but the big three, then why did Toyota spent $1.5 Billion building a new truck plant in Texas that started producing trucks a little over a year ago? Why did Toyota just unveil their latest version of the Chevy Tahoe, (but a little bigger and less efficient) this year?

Companies built butt-loads of SUV’s in the 1990's and 2000's because we Americans were gobbling them up and they are one of the few models that actually make them money. American’s tastes are the problem, not the companies that produce products we want. It didn’t help that cheap gas prices made them unreasonably affordable to operate.

Furthermore, if the big-three could wave wand and start producing smaller cars tomorrow, it would nothelp them for two reasons:

1)Nobody is buying cars, regardless of brand or type, due to the financial crisis.

2)Small cars - especially Hybrids DON’T MAKE DECENT PROFITS. This includes many of the small cars made by the imports.

As an example, nearly every industry analyst knows that even super-efficient Toyota loses money on each Prius it makes. They may make a few dimes on Corollas, but only because they are subsidized by the Japanese market and subsidized by the six models SUV’s, and the larger cars that Toyota makes.

If gas had stayed up in the $4 range, then people who normally buy big, luxury cars may have looked toward smaller luxury cars, where a profit could be made. With gas back under $2 bucks, small cars are economy cars again.

Your plan for the big three, would due what the Prius has done for Toyota - make good PR, but it would do nothing for their bottom line.

Bob said...

My take on your plan: (Me being an arm-chair enginner)My comments in bold.

GENERAL MOTORS

Buick—Gone. The loyal Buick customer base has to be pushing 70. Elderly people buying their last car ain't a plan for the future.

Wrong – keep Buick, but spend a lot of money injecting updated design – See 2010 Buick LaCrosse. Buick has the quality of Lexus, it just needs to keep doing what its doing. Have you seen the Enclave? – it rocks and gets the best mileage in its class.

Cadillac—An upscale line is good. And I like the new "sharp edge" direction. Skews younger. Pick one full size sedan, I like the STS, so ditch the DTS. You can only keep the Escalade if every single one is Hybrid or DoD (Displacement on Demand—shuts off half the cylinders when not needed)

DoD is standard on every GM Truck or SUV with the 5.3L and 6.0L V-8, which is the vast majority of its engines. The 4.8L is only on a few base models.

Chevy—Family cars, SUVs, pickups and the Corvette. That's it. Start making Hybrid Equinoxes. And goddammit, build a fucking station wagon again. No more Avalanche—stupidest idea ever. All full-size trucks and SUVs need Hybrid or DoD powertrains.

Therermay be Hybrid Equinoxes coming, because there are hybrid Saturn Vues, but why make them all Hybrid if you lose money on each? It should remain an option. Again, DoD is standard on every GM Truck or SUV with the 5.3L and 6.0L V-8, which is the vast majority of its engines. The 4.8L is only on a few base models.

GMC—Gone. There is no need to duplicate with Chevy: Yukon=Tahoe. Stop building both. All commercial trucks are Chevys now. Why? Because the separate division has a whole layer of management that is redundant.

There is a lot of sense to making GMC. It’s so Buick, Cadillac, Pontiac dealers can sell a line of pickups that doesn’t say “Chevy” on the front, when they won’t be selling Chevy cars, confusing the customers. The cost of engineering this line is virtually nothing.

HUMMER—Gone. Just for symbolism's sake if nothing else, but that market is dead.

I wish they made a few small vehicles like the old Jeep CJ’s. It’s too late for that, so I have to agree with you.

Pontiac—Because I like the Vibe, Solstice and G6 so much it's hard to let go. Pontiac can be the "sporty division" and those three and the G8 is their lineup. That's it. No SUVs or vans, and ditch the G5, it's ugly.

They don’t do vans anymore, and won’t be doing SUV’s anymore either. That is what GMC is for. I agree with what GM WANTS to do with this brand: Make it a niche brand of rwd cars. Now if their horrible dealers will LET them. Goodbye to the G#, G% and the Vibe. They

Saab—Sell it. Please. Let somebody in Sweden make cool, quirky cars again. GM trashed this once great brand the second they bought it, and I will go back to Detroit and kill someone if their mismanagement means Saab's demise.

May be the best chance to unload the brand. Still, it’s pretty ingrained into the engineering of GM.

Saturn—Duplication is a problem here, but they have the best lineup in the company, run differently from factory to sales floor and as far as I know do well.

Agreed. Now that Saturn’s are the same as Opels, the engineering is cheap. The only question is would it be better for Buick to share Opel, like they do in China?

FORD MOTOR COMPANY

Ford—Your website won't load, so you get nothing. Actually, here's what I want: The European Focus. Wagons and hatchbacks. Trust me.

Ford agrees – they are coming.

Lincoln—Again, and upscale brand is fine. Sedans only. No SUVs.

SUV’s yes, especially the upcoming MK…MK…whatever.

Mercury—A fetish for vertical grillwork is no reason to duplicate an entire line of automobiles. Good bye.

It think they should make all Mercurys into smaller Lincolns. That said, chicks buy Mercurys for some reason.

CHRYSLER

Chrysler—Family sedans and minivans. No more Aspen. All trucks and SUVs are now Dodges or Jeeps. Limit duplication.

agreed

Dodge—Sporty cars and trucks only. All lame sedans (Avenger=Sebring) and vans are now Chryslers.

Agreed, Except Dodge needs a minivan…it sells

Jeep—Compass, Liberty or PAtriot: Pick one, lose the other two. Everything else is fine.

agreed

Mr Furious said...

Well, we should clearly both be collaborating to run FoMoCo and Chrysler, Bob...

As for GM, I hear most of what you are saying, and I recognize that I am talking out of my ass, but I don't really see any of your suggestions as drastic enough departures from the status quo.

1. Buick. The Enclave IS nice, but is that a reason to keep the brand alive? Why is Buick's quality better? Are they selling? Are they making money? If not, it's a waste of resources that could strengthen the rest of GM. Keep in mind, all of the chopping I want to do.

2. Never said there should only be hybrid Equinoxes, but they should be offered.

3. If they could prove that GMC is merely badge engineering and had no cost, then fine. But I have a feeling there is a couple floors worth of upper management somewhere doing the same thing as Chevy. Not to mention maintaining marketing and advertising for two versions of the same truck. Your dealer argument has some merit—if you'd rather, just flip it and have all trucks be GMC, and stop making the Chevy version.

4. Looks like you Pontiac comment got chopped...but we more or less agree.

All of my suggested chopping would involve consolidating the nest aspects and talent of each brand into the remaining GM.

Jennifer said...

Rock on Mr. F ... rock on.

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