Posted on 06/02/2008 2:46:15 AM PDT by Zakeet
The rapid decline in truck sales in the last month has pushed General Motors Corp. to the brink of a once-unimaginable trough: Its U.S. market share could fall below 20% on Tuesday when the auto industry reports vehicle sales for May.
Sales of pickup trucks and big sport-utility vehicles -- Detroit's bread-and-butter products -- have been falling for the past few years, pulled down by the slumping economy, falling home values and rising gasoline prices. But the declines accelerated this year and showed an unexpectedly steep drop in May, as gasoline prices reached $4 a gallon in many parts of the country.
That forced GM and Ford Motor Co. to slash truck production in the second half of the year. Ford also gave up its goal of returning to profitability in 2009 and has begun preparing to cut 2,000 white-collar jobs.
Amid all the bad news, GM's dwindling market share had been largely overlooked. It hit a record low of 20.5% in April, according to Autodata Corp. Given the direction of truck sales, GM is likely to report a drop in May sales large enough to pull its share below 20%.
[Snip]
Ford has traditionally had the top-selling U.S. model in its F-150 pickup, but the Toyota Camry is now nearly even in sales and could move ahead in May. It would be the first time the Camry outsold the F-150, according to Autodata.
Chrysler LLC, which lost the No. 3 spot in the U.S. market to Toyota years ago, could fall to No. 5 in May if its deep sales declines continue and Honda Motor Co. books a strong month.
(Excerpt) Read more at online.wsj.com ...
my daughter sold her Chevy Suburban and bought a Toyota van
The Big Three had their opportunity last year to rid themselves once and for all of the albatross around their necks known as the UAW. Instead, they caved and gave the UAW what they wanted.
No sympathy here.
In 1955, General Motors enjoyed a 50% market share. Half the vehicles sold in the U.S. were built by GM.
It’s been a long, slow slide into oblivion.
Got it.
The dim-wits who live in Bloomfield Hills, drive a Lexus, and work truncated days in the exec offices had nothing to do with it. Nosir, them dudes were stymied in their efforts to design, build and sell cars and trucks that would just FLY off the lots, by the Big, Bad, Evil UAW.
Get a brain. The frat rat tards who ran GM are utterly and totally responsible. They couldn't put together a vehicle like a Camry if they wanted to - they wouldn't have the patience.
What's happening to GM is that a superior management attitude is winning, one that values product over hype and marketing BS. The real world is catching up with the Maroons who populate the top of places like GM and Ford.
It's really funny to watch them get what they deserve.
What's sad to know is that the people on the line get hurt more.
No, but the UAW is the largest single problem. Even when management brings in a known proven design from, say, Europe, the UAW promptly sabotages it and renders it a flaming pile.
Case in point - Ford Mondeo/Contour.
It’s both management AND unions at the American auto factories.
The unions demanded all the benefits that left little profit for capital improvement. Management gave in to them, and allowed their plant to become decrepit. It’s certainly not the market. For every Ford or GM or subsidiary plant that closes down, Toyota or Honda or one of their subsidiaries opens one. And the Ford or GM plants are closing in largely democratic union controlled cities, while the Japanese plants are opening in rural areas where the unions and democrats don’t run corrupt political systems.
You can still have good manufacturing jobs in the USA. Ford and GM won’t provide any of them 10 years from now.
Geez, it’s pretty easy to figure out what kind of vehicle will sell... when gasoline prices are high.
It’s a fuel-efficient vehicle.
It’s too bad that GM and Ford think otherwise.
Dinosaur death alert.
In all fairness, a clean sheet design takes at least four years to make it to production. The go ahead for today’s gas guzzlers was made before gasoline was above $2/gal.
2009 model cars are going into production this year for release in the fall, 2010 model cars are fully designed, and 2011 model cars are more or less so as well save for some minor changes.
It is the fault not of the guy on the assembly line, but the fault of the clowns the guy on the assembly line chooses to represent him in contract negotiations, and the management sitting across the table in contract negotiations.
The Big Three have continuously made concessions to the UAW in contract cycle after contract cycle, allowing labor costs to spiral out of control. Now we have a situation where GM is paying people who no longer work on the line at all, but perform “charitable work” while still being paid. We see health care and pension costs running away without any limits. The Big Three are little more than HMO’s who build cars as a hobby on the side.
The single thing that I believe led to run-away labor costs was “pattern bargaining,” where once the UAW got a contract for $X/hour at one of the Big Three, they’d force all of the Big Three to pay that rate, regardless of whether or not it made sense for the other companies.
A company that dealt with the UAW competently to break pattern bargaining was Caterpillar - they held the line and refused to buckle to UAW demands to be paid more simply because the UAW workers at John Deere were getting paid $X/hour. It took Cat going to the mat and shutting the UAW out of plants for many months, but finally Cat won the battle.
The results are very plain to see today: Cat is a thriving company in world-wide heavy equipment sales. Cat has health care and pension costs under control. Cat is able to roll out new products with higher profit margins. It took a long strike and real commitment on the part of management to break the UAW, but it has paid off in the long run.
The Big Three don’t have the spine to stand their ground and break the UAW. So they’re in the situation they find themselves now - spending billions to buy down contracts and simply lay off workers outright, rather than reduce wages and keep more people. The UAW and management have taken care of themselves quite well, while the guy on the line is getting screwed royally.
Then we can get to the atrocious and silly designs that the Big Three have foisted upon the consumer, but that’s a whole ‘nother rant.
Smart companies would quickly pull in cars made for other markets and sell them here.
You know, like Honda, Toyota, and Nissan have all done? (Fit, Yaris, and Versa, respectively).
To Ford’s credit, they’ve announced that they WILL be bringing the well regarded Euro market minicar, the Ford Fiesta, to the US in 2010. However, due to the stupidity of the UAW when they screwed up the last Euro Ford design in the US (Mondeo/Contour debacle), and excess capacity in Mexico, they will be building it at a former F-150 plant at that country, well away from the UAW. So it shouldn’t suck.
Your recount of the history of UAW negotiations is a good one and I won't discount it. Clearly the unions have distorted what should have been a market process.
But I worked for GM. In the 1970's. My comments are direct observations of the people involved. Theirs was a world of certainty: they would always be on top (the government would see to that); ordinary people would buy whatever they built as long as they put enough chrome on it (oooh! shiny!); don't change things, people don't like change; and do NOT make waves, because that will upset people.
They went along with the unions because they were sure that market share would always be theirs, and of course, because the Democratic party controlled Congress and unions forced them to under threat of regulation or violence.
I understand what you have said.
But you cannot imagine the stupid crap I heard from those troglodytes and yes men.
The funny thing is that they actually made not a half bad product. The trucks - light and medium duty - were actually quite good. GM's heavy's were crap, but then we in America have Kenworth, Peterbilt and Mack to hold that up, along with beautiful engine companies (well, they were) like Cummins and Caterpillar (and even the old Detroit Diesel).
But that was the high point for them. The cars were, and are, garbage. Occasionally they make something that isn't stupid, but that's the exception.
It isn't an American problem. BMW, Honda, Toyota, Nissan...you name it. They have design offices here in the US (but uh, usually not in Detroit). Staffed in many cases by Americans although they tend to be multi-national.
So saying that the extra costs of unionized labor prevented them from bringing new designs to market I think is wrong. Those guys wouldn't have gone for it in the first place. I heard them say so more than once. There's a reason their designs are old and tired, and it's because they think that's better and that's what their customers want.
But it isn't true. Because the new designs that others came up with were so much better than they could have imagined. If Detroit had tried to build an IS-250 Lexus, they would have charged $90,000 for it, even if it only cost them $20,000 to build. That's the way they think. So they wouldn't have done it, because they know that no one would buy it at that price.
The world changed around them and they weren't quick enough to adapt. That was true of both management and labor. The Saturn experiment wasn't bad, and even now those vehicles are actually decent - but compared to the competition, are they really compelling? They have to be marked down heavily and sold with a patriotic overtone.
What I said is still true. The management of the other companies concentrate on engineering, design and reliability, not marketing campaigns, financial games, and political maneuvering.
And the buyers reacted the way they should.
Like someone else on the thread said....in 10 years there will still be a lot of autoworkers in the U.S.: but they will work for Toyota and Honda predominantly. GM and Ford will probably still be around, much smaller. Chrysler....will be gone.
Whatever happens, they did it to themselves.
I agree that the corner-office idiots have a big share of the blame here. IMO, one of the reasons why they did not produce good designs is that they would cut engineering staff to “cut costs” - costs that were high as a result of incompetent negotiations with the UAW.
Your assessment of “put more chrome on it” — spot-on. It embodies everything that has been wrong with the Big Three for years.
And your assessment that management wouldn’t go for anything new - quite true. I remember reading articles out of Detroit wondering what happened to their market share in California - in the 1980’s. They just could not believe that they were losing market share as quickly as they were. As an investor, I was wondering “How could they NOT see this? How is it that this is taking them by surprise?”
Then I learned that there was a ban on employees driving anything but domestics into work. ie, if you had a Toyota, better not show up for work and expect to park in the company lot. This struck me as singularly stupid. In the computer industry, if we had a competing product that was kicking our butts, what did we do?
We went out and *bought* the product. Bought more than one usually. One, we’d take apart and analyze everything about it. Another one would be put into operation and evaluated as tho were were customers. And sometimes we’d have an outside shop of consultants do a side-by-side analysis of the competition box next to ours.
The Big Three seemed to believe that they were always going to be there, just as you say. This led them to never critically examine the competition and figure out what was there that the customers were buying. And I agree, this was stupidity writ most large on the part of management.
The UAW, tho, has removed all possibility of a future. There is no way that these companies could turn themselves around quickly enough, even if you could wave a wand, fire all of the idiots in senior management (or even all of senior management, regardless of their competence — just to get a clean slate). The structural cost issues doom the Big Three. There is nothing that they can do now, even putting out a car that sells like hotcakes, that will save them from ultimate collapse. While input costs other than labor were stable, it looked like they might get on top of the problem by buying out the UAW.
Now with skyrocketing input costs and huge increases in gasoline/diesel prices that require huge leaps forward in technology, well... it appears too late for them. They’re all bleeding cash at rates that they cannot sustain. They’re too far behind on the R&D necessary to make a huge product shift.
Just this morning on Bloomberg, I saw them tease a story that a source is reporting that Cerebus Management, the hedge fund that bought out Chrysler, is in talks to sell most of it off in pieces.
The Fit, Yaris, and Versa are simply replacements for subcompacts & compacts (Civic, Corolla, and Sentra) that have grown to compact & midsized cars. All Japanese cars with name recognition have grown. The Accord, Camry, and Maxima were all originally compacts; this year the Accord grew to fullsize.
What I’m saying is that the Fit, Yaris, and Versa were not “quickly pulled in from other markets.” For example, the Versa went on sale in 2006 as a 2007 model. This is the same model year as the enlarged Sentra.
Furthermore, the subcompact/entry level cars are not exactly the bread and butter cars for a company—not in the US that is. Their purpose is to establish brand loyalty. If your first car is a Honda Fit and you liked it, you are more than likely to move up to a Civic or Accord for your second. Honda sold only about 50,000 Fits in the US in 2007.
If you look at what sells in the US, it’s fullsize trucks and midsized cars. The fullsized trucks are obviously taking a beating, but they still outsell subcompacts ten to one.
2005
1.Ford F-Series 901,463
2.Chevrolet Silverado 705,891
3.Toyota Camry 433,703
4.Dodge Ram 400,453
5.Honda Accord 369,293
6.Honda Civic 308,415
7.Nissan Altima 255,371
8.Chevrolet Impala 246,481
9.Chevrolet Malibu 245,861
10.Chevrolet Trailblazer 244,150
2006
1.Ford F-Series 796,039
2.Chevrolet Silverado 636,069
3.Toyota Camry 448,445
4.Dodge Ram 364,177
5.Honda Accord 354,441
6.Toyota Corolla 318,123
7.Honda Civic 316,638
8.Chevrolet Impala 289,868
9.Nissan Altima 232,457
10.Chevrolet Cobalt 211,449
2007 (Jan-Oct)
1.Ford F-Series 588,952 - 12.5% (vs Jan-Oct 06)
2.Chevrolet Silverado 526,575 - 2.4%
3.Toyota Camry 398,868 + 6.4%
4.Honda Accord 332,815 + 10.2%
5.Toyota Corolla 317,796 - 4.0%
6.Honda Civic 278,764 + 2.2%
7.Chevrolet Impala 270,504 + 12.6%
8.Nissan Altima 12.6% + 26.6%
9.Dodge Ram 214,569 - 29.3%
10.Honda CR-V 184,003 + 34.9%
I don’t know how the UAW screwed up the Contour; maybe you can fill me in on that. However, judging by what sells in America, I doubt the subcompact Fiesta will do much to turn around Ford. Small diesel engines for their half-ton F-series to increase fuel economy and serious strides to close the (perceived?) import quality gap for their compact and midsize cars will however.
I don’t think Ford or GM will return to profitability until their reliability is perceived to be as good as the Japanese rivals.
At that time that might have been 2 million vehicles. How many does GM build now?
In 1955 there were also only 3 car companies to note selling vehicles in the US.
Not defending GM, they’ve made tons of mistakes, but to compare the world of 1955 to 2008 is nonsensical.
Tell me this couldn't sell if it was in the states. I will never understand Ford World Wide. They make excellent cars, and yet up until recently the NA lines have just been ugly scraps.
I can’t figure out why the Galaxy isn’t available in the states.... I admit I am not in Mi. making their decisions, but ford doesn’t lack decent cars with good fuel economy.. .they just don’t sell most of em here.
Two model generations back, they did sell that in the US. It was badged as a Contour or a Mercury Mystique and it sold really well for the first year or so... Unfortunately, the UAW had demanded that it be built here as part of their contract (IIRC) and they promptly sabotaged it. Sales tanked after the public discovered how badly built they were.
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