If I ran GM part 2

As everyone knows GM is now undergoing a desperate crisis and has come to the American taxpayer hat in hand for a substantial loan. The Democratically controlled congress has asked that GM produce a business plan before considering the release of the funds. I wholeheartedly agree with not throwing good money after bad. I think I want to take a shot at being Rick Wagoner for a day and see what I could come up with.

In order to identify the solution to a problem, one must articulate point by point what those problems are and how to address them. Here are the major issues which are making GM as is unsustainable:

• Too many brands, many utilize the same engineering components with inconsistent results. For example the automotive community has widely praised the Chevy Malibu, which is regarded as an excellent family car. Its platform mate, the Pontiac G6, has been received with much less enthusiasm. GM should go from eight to four brands, getting rid of Hummer, Saab, GMC, and Saturn; keeping Chevrolet, Buick, Pontiac and Cadillac. Each of the remaining brands would become distinct in mission and purpose with little overlap.

• High labor and Legacy costs. This is a sticky issue for many but the fact is that these costs put the General at a $1,500-$3,000.00 per car cost disadvantage versus Honda and Toyota, which use their advantage to market high quality compacts such as the Civic and Corolla. GM on their lower cost cars is forced to compromise on engineering, standard features and build quality in order to make profit. GM taking the steps to reduce the number of brands will call for a reduction in workforce, which in turn will help with the costs. Also this is an area where taxpayer funds might be best used.

• GM runs a bloated and overpaid management system. Toyota and Honda run far leaner management per number of cars sold than the General and their executives are not paid nearly the salaries of any of the big three, yet their respective companies are very well managed.

• GM needs a couple of clean burning diesels in its line up. A 2.5L Four cylinder and a 3.5L V-6. Volkswagen, Mercedes and Honda, have proven that diesel engines if engineered properly can be clean and quiet running. The real world mileage advantages can be extraordinary. The Volkswagen, Jetta TDI for example gets over 42 mpg in real world testing.

Here are my ideas to address some of these issues and for a future product mix.

In order to protect itself from its immediate situation GM should go ahead and proceed with Chap 11 and start restructuring. This will allow GM to shed some of it’s over burdensome labor contracts. The government can step in with funds to insure that during this period that all warranty work will be covered in full. GM and Congressional leaders should hold a national televised press conference in prime time to explain to the American public what this entails and to ensure the public that GM is not going out of business and that there is a plan in place to address the company’s problems.

Now the General can begin restructuring itself, eliminating brands and putting its resources where they can gain the best results. Here is where to trim the fat:

Hummer: There is really no need for this brand to continue. The Hummer vehicles of today are nothing more than re-badged Chevrolets. The H2 is just a re-skinned Suburban and the H3 is just a four door body shell over a Colorado pick up truck frame. The ones you see our military use are made by AM General and not GM as is widely believed.

Saab: There is not a reason to really hang on to this low volume maker. Many Saab loyalists gave up on the brand after the GM takeover. Saab lacks the prestige of Jaguar, Mercedes and BMW and does little to add to the bottom line. Sell it.

GMC: This brand is nothing more than pure badge engineering at its worst. There is not a dime’s difference between the GMC’s and Chevrolets mechanically. It is just a different grill and trim.

Saturn: This brand was conceived as Honda/Toyota killer almost two decades ago. Its unique business model, plastic bodied cars and culture of one-price fits all garnered a lot of interest. All of that is now gone and the Saturn cars are just re-badged versions of other GM products. It has two unique entries; the Vue and the Astra, neither of which are at the top of their respective classes.

So under my plan the four remaining players: Chevrolet, Pontiac, Buick and Cadillac would have the following dealer couplings:

Chevrolet-Pontiac

Buick-Cadillac.

I would engineer the brand’s lineups as follows:

Chevrolet: The mission of this brand would be to offer a wide range of family oriented products, this would be volume leader.

Aveo: ($13,000-$17,000) Refine and re-engineer this car in terms of quality and performance. Work with Daewoo (The car’s actual maker) to develop gasoline and hybrid versions of this car; aim for a starting price of 13K for the standard model and equip it to match the Honda Fit. Also a Hybrid version for $16,500.00 with mileage close to 50 mpg would certainly help with CAFE regulations and undercut the Toyota Prius by five grand.

Cobalt: Drop this model. It consistently rates low with most critics and loses money for GM. Other than the Turbo SS, the Cobalt is not a class leader.

Cruze: ($17000-$24,000) Develop this car as an up-market alternative to Civic, Mazda3 and Corolla. Make it slightly larger and roomier than the three aforementioned competitors. Offer coupe, five door hatchback and sedan versions of the car with three different engine choices. The base or “efficiency model” would have a 1.5 turbo 4 cylinder that will get close to 40Mpg. The up-level model would receive 2.4L that puts out 160Hp. Also offer a Hybrid version of the 2.4 and aim for the high 30’s in mpg.

“Cruze” Crossover ($21,000-$27,000) Replace the current Equinox with a crossover that will seat five in standard trim and option it for seven similar to the RAV4. Offer both a 2.4L 4 cylinder as standard and a 3.6L V6 as the up-level engine. Also offer a 2.5L turbo diesel for towing and higher mileage.

Malibu: ($21,000-$28,000) Increase the width by 2-3 inches (That is the biggest complaint people have about this car) Refine the steering feel. Replace the Hybrid with a 2.4L turbo diesel engine. With a six speed auto box this set up will get 35 or more MPG and have plenty of low end torque and drivability. Increase the six cylinder engine to 270Hp to match the Accord and Camry. Find a way to decrease the curb weight. Offer coupe and hatch versions of this car as well and one high performance model with the 3.6 DI V-6 trimmed to 280Hp with more aggressive suspension settings.

Impala: A slightly wider Malibu with a couple of more inches of wheelbase would make this outdated car redundant; drop it from the line up.

Transverse: ($28,000-$35,000) leave this intact while finding a way to lower curb weight. Also offer as an alternative a 3.5L Turbo Diesel V6, tuned to reach 30Mpg Hwy.

Camaro: Leave it as planned; this would be Joe Six Pack’s sporty ride.

Corvette: To remove it further from the Camaro, switch to a mid engine set up. Also drop the “Chevrolet” designation and sell as a standalone product.

Volt: This is a great piece of tech, GM most now work hard to make this EREV affordable to the majority of middle class car shoppers.

Trucks: Leave as is. GM trucks have the highest overall rating by CR. Automobile, R&T etc…

SUV’s Eliminate all Truck-Based SUV’s except the Suburban and offer it in two lengths and wheelbases similar to what Ford does with the current expedition. The Transverse is what about 95% of mid to fullsize SUV buyers really need. The ‘Burb is only better for towing and hauling really heavy loads.

Pontiac: Pontiac needs to be reborn as a more sporty division, with different products than Chevrolet. Hence everything in the current line-up except the G8 needs to be fully replaced and here is the mix:

Solstice: Keep this roadster and continue to refine it further. Furthermore the Kappa platform on which it is based can be used to underpin other Pontiac projects.

G5: ($18,500-$24,000) Replace the current Cobalt clone with a compact rear wheel drive 2+2 and rear wheel drive 4-door. Also offer a model with a removable top. The base engine should be a 170HP version of the 2.4L and the up-level engine should be a 260HP turbo version of same. The up-level version will replace the Cobalt SS. The cars should have a taunt Euro feel and aggressive styling. In concept these would be a BMW 1 series for much less.

“Kappa” crossover ($23,000-$25,000): Replace the Toyota Matrix cloned Vibe with a compact crossover based on the Kappa Chassis, offer both G5 engines and optional all wheel drive

G8: ($27,000-$32,000) Beef the V6 up to 300HP and keep the current V8. Also add a low volume 2 door to the line up. In the following year, phase in a hardtop convertible to replace the defunct G6.

Buick: Would serve as GM’s near luxury brand, similar to the Acura TL, Lexus ES 350 and Mercedes C Class.

Lacrosse: ($26,000-$32,000) Move to the Epsilon platform (Malibu) and offer a standard 3.6 with 275HP a six speed auto and standard leather, power everything, etc Offer a 3.5L Diesel as an alternative engine choice for those seeking better gas mileage. Tune the suspension soft in the standard trim and offer a slightly firmer GS version as well.

Rivera: ($27,500-33,000) a low volume 2 door based on the Lacrosse with distinct styling and all the same engine options.

Lucerne: Front Drive + V8 = Second Rate performer-Kill this outdated thing.

Park Avenue ($31,000-$38,000) a full size 4 Door that replaces the Lucerne. This would be a rear wheel drive car (Holden Chassis) with a base 3.6DI engine with 290HP. The up-level model would have a 4.6L V8 with 330HP. Both tuned for a softer ride than the G8. As an alternative engine offer a 3.5L V6 Diesel as a higher gas mileage alternative.

Enclave: Leave as is but offer a 3.5L V6 Turbo-Diesel as an engine alternative to the standard V-6.

Cadillac: This is the flagship division. This is the top end in performance and luxury.

BLS: ($28,000-$35,000) this would be the base Caddy, taking over for the original CTS and would be built on a shortened Sigma Chassis. It would act as a 1 series competitor with rear wheel drive and a 300HP 3.6V6 as the standard engine. Offer both 6 speed manual and automatic transmissions. Tune it with a taunt suspension and equip it similar to the 3.5TL.

CTS: ($35,000-$45,000) this would be a rear wheel drive 5 series/M45/E Class competitor. The base engine would be 3.6L liter V6 tuned to 305HP With an Optional 3.5L V6 Diesel as a higher gas mileage model. The top engine would be a turbo version putting out 350HP. All wheel drive would also be an option. Offer both coupe and sedan variants.

SRX: ($40,000-$47000) this crossover would be based on the CTS above and offer the same engine choices.

DTS: see Buick Lucerne, kill this underperformer.

SLS: (super luxury sedan) ($50,000-$65,000), this would be the true rear wheel drive. flagship luxury sedan for Cadillac and GM and replaces the DTS. The standard engine would be a 5.0L Northstar V-8 with an out put of 400Hp and an 8 speed automatic, to match the specs of the S-Class and LS460. This car would be loaded to the nines with everything. Both a short wheelbase and longer wheelbase executive models would be offered.

CTSV-update to the new larger CTS body, but keep the current ultra high performance engine and suspension.

Escalade, Escalade EXT: Cadillac needs to get out of the truck business.

Well that is my product mix which weeds out the mediocre cars GM currently has and replaces them with cars that exceed the competitors’ offerings at every level. Furthermore my plan also keeps overlap and redundant models to a minimum while satisfying a broad
range of consumers.

Reducing brands means a smaller GM with less employees, but it will insure GM survives as a more flexible and competitive entity which most importantly is profitable. It is my hope that GM survives and has the best cars on the market in every single class. It would do my heart good to see GM cars come out the winner in almost every comparison test in every magazine, and to be able to read across a spread sheet and see the GM car the best in cornering, slalom, acceleration, and gas mileage against every car in its segment and to have the best 5 year reliability to boot. With few brands to mess with it will be easier for GM engineers and designers to achieve this.

There are other issues that GM should address. Such as being the first to field an affordable Hydrogen car and supporting infrastructure. The Volt is a good start, but gas-hybrids and extended range electrics are stepping stones to the real solution of fuel cell cars

This issue has caused me soooo much stress. I live about 20 or so miles from Flint. I watched Flint die. I'm watching Detroit die. My dad, like most dad's in Michigan, worked at GM Metal Fab/Truck and Bus for over 30 years. I get so frustrated and worked up listening to all that is going on. I actually had points I was going to make (some agreeing, some disagreeing with what you had said) (that's why your post is parsed in the quote above) but I can't. Isn't it stupid? I am so flustered I can't do it. Anyway, thank you for paying attention to what is going on; what, if allowed to happened, will become the worst thing to happen to America in a very long time as far as economic impact. I don't know if you saw my post, but www.theengineofdemocracy.com will allow you to submit your thoughts, write to congress etc. I believe www.americanautoindustryrocks.com is similar.

You make some very interesting points and I agree with some of your plan but some part of me really wants a hummer so I would hate to see those eliminated. However if it would benefit the economy I guess I would be okay with it.

Heard today that Hummer will be eliminated.

Oh well I would never be able to afford one anyway so I guess it don't really matter.

I know this issue is on a lot of people's minds, thats why I brought it up. I am trying to stay away from the political question itself about the using taxpayer money to help the car industry out and as a car enthusiast and smart consumer come up with a viable structure to allow GM to compete in a wide range of markets and make profit on every single car it sells.

Thank you TJ

until the big 3 get out of the burden of the UAW , they will never be profitable

thats why Honda and Toyota are successful....no unions

i'll quit before I get too poltical

Your sentiments are shared by many. It is a rather controversial issue and one I wanted to stay away from in this post due to the potential for political discussion.

One thing is inarguable. That is right now GM, Ford and Chrysler cannot build a car in America for less than 18,000 dollars, match the quality of Honda and Toyota at that price point and still make a profit.

As a result GM, Ford and Chysler do not have an effective competitor for the Yaris, the Versa and especially the Fit ( a car Honda is selling faster than it can ship them). These cars known otherwise as the "B" segement is the fastest growing area in car sales right now.

Very interesting material.

I do think the "worker pool" or "jobs pool" need to go! They can collect nearly full pay and benefits for not working (even when a job opens up) PLUS government unemployment.

Also, to note, the auto companies already are government-tax payer paid/subsidied...due to the individual States that bid for their plants, and pay multi-million(billion?) dollar "incentives" for them to come there and stay there... That's one reason why they insist they do have to bail them out and not allow Chapter 11...because it's we the people who own them!

Also, without saying right or wrong... one reason our cars are so expensive than the same company's cars in other parts of the world is because of the environmental saving build ins. Now, read that... we are the only country required to save the environment..the other countries can drive less expensive cars because they don't. Regardless of what is right or not, it should (ooh I did I say "should?") be the same world-wide. IMO.

A lot of good points made here Sky, environmental regs do add to the cost of production but I would have to make one small correction. Japan's emmission laws are actually stricter than ours. In fact so much so that anyone who ones a car there is all but compelled to by a new car every 5 years or risk having a non compliant vehicle.

Keep in mind that all companies who sell here are required to follow the same regs as domestic companies. Safety is also a factor, every car sold is required to meet requlations for hood height, bumper height, front and side airbags, and next year all cars sold will be required to have electronic stability control ( This is actually a good law because waaayyyy too many people in this country drive poorly)

It is interesting that Hyundai can deliver a Full Size car ( The Sonata) starting at $15,000 with rather good build quality, manufactured here ( Alabama) in America. You can also buy a new car from Nissan, starting at $10,100 (the value packaged Versa). This one however is imported.

I actually think even if we give them the loan, that GM will likely end up in Chap 11 anyway. I believe all indicators show this recession will last till at least 2010, and that means very slow business all around. Toyota and Honda both have sufficient cash reserves to carry them through. Of the big 3 Ford is in the best shape money wise.

Chapter 11, contrary to popular belief is not the end of the world, almost every major air carrier has filed bankruptcy at one time or another and yet you can still get a plane ticket and fly anywhere you want to go.

If GM followed my plan, they would be ready to emerge with a strong line up of very desirable cars to satisfy any and all tastes.

Well crap!! I tried, I really was gonna post here my thoughts and feelings. They really do run very deep on this issue. Can't do it. I get too angry. It's really quite ridiculous on my part, I know. I just get angry thinking about the treatment they have received, the people in the media who talk without knowing, the huge huge huge impact of this. Tim, thank you so much for starting this thread. I hope it keeps getting bumped for others to read on comment on because it is such an important issue--and that's another thing that gets me going is how people don't see that it is. Sigh.Suffice it to say thank you so much for starting this. I tried.

(((cant))) Try just noting the bullet points first, and keep working on keeping the emotion out of it. I'm interested in what you have to say.

On the "emissions" note.. grrr Florida just implented the rule that our cars will also have to meet the California standards. There isn't smog in our major cities, we have the constant sea breeze in the big cities (except Orlando.) Why do we have to carry the weight of the world's pollution on our backs?

You are welcome, Sky gives some good advice on this one, sometimes you have to take time to collect your thoughts and break things down into smaller points. TJ

unfortuantly one of the side affects of a huge economy is pollution, America, China, and India all have this problem. We to some degree are responsible because we can afford Green Tech whereas citizens in many countries cannot.

I do agree that other countries do need to step up and do somethings as well, even if its small efforts.

Keep in mind that modern OBD and emissions have some actual benefits in other areas, such as a perfomance and refinement. The modern Toyota Avalon V6 in terms of acceleration would leave almost any 70's era V-8 family car far behind (0-60 in 6.1 seconds) and do so getting close to 30MPG and in near silence (I have driven one of these).

This is just in:

Congress, White House nears deal on auto bailout

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By JULIE HIRSCHFELD DAVIS and KEN THOMAS, Associated Press Writers Julie Hirschfeld Davis And Ken Thomas, Associated Press Writers – 1 hr 39 mins ago
Play Video AP – Pelosi: Vote on $15 billion auto bailout coming

• Slideshow: Financial Crisis
• Play Video Video: Progress made on auto bailout Reuters

Related QuotesSymbolPriceChange^DJI 8,934.18+298.76^GSPC 909.700.00^IXIC 1,571.740.00


AP – House Speaker Nancy Pelosi, with House Financial Services Committee Chairman Barney Frank, D-Mass., at …

WASHINGTON – A federal "car czar" would oversee a government-run restructuring of U.S. auto companies in return for a $15 billion bailout of the beleaguered industry under an emerging deal between the White House and Congress.
Negotiators worked through the night Monday narrowing differences on a bill to rush short-term loans to the struggling carmakers through a plan that requires that the industry reinvent itself to survive — and pay back the government if it doesn't. The package could come to a vote as early as Wednesday.
The measure would put a government overseer named by President George W. Bush in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the automakers fail to do what's necessary to become viable. The White House was seeking tougher consequences, including allowing the overseer — being called a car czar — to force the companies into bankruptcy if they weren't doing enough to cut labor costs, restructure their debt and downsize to stay afloat.
Despite optimism on both sides that Congress and the White House could reach a swift agreement on the measure, it was still a tough sell on Capitol Hill. With lawmakers in both parties still bitter over the Bush administration's use of the $700 billion Wall Street bailout, many of them were preparing to hold their noses and vote for yet another federal rescue to avert deeper economic disaster.
"While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done," Senate Majority Leader Harry Reid, D-Nev., said. "This is no blank check or blind hope."
The developing plan would dole out auto industry loans right away, drawing the money from an existing program meant to help the carmakers retool their factories to produce more fuel-efficient vehicles. Then the czar would write guidelines, due on the first of the year, for restructuring the companies.
The proposal would attach an array of conditions to the auto bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
There also would be rigorous government oversight, with the special inspector general monitoring the Wall Street rescue also keeping tabs on the carmaker bailout. The Senate on Monday confirmed Neil M. Barofsky, a federal prosecutor in New York, to be the special inspector general.
The proposal gives the car czar say-so over any major business decisions by the automakers while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.
Also under discussion is a requirement that the carmakers taking federal aid get rid of their corporate jets — which became a potent symbol of the industry's ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.
Still, the White House wanted clearer consequences for the automakers if a company was not meeting its own promises for long-term viability, according to officials who would comment on the continuing negotiations only on condition of anonymity.
Under Democrat's proposal, if the Big Three didn't come up with suitable restructuring plans by the end of March, the czar would have to submit his own blueprint to Congress for a government-mandated overhaul.
Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.
"This is a real hill to climb even if we can get agreement between the White House and congressional leaders," he said.
Even sympathetic Republicans weren't ready to sign on. Sen. George Voinovich, R-Ohio, has "numerous concerns" about the bill, including the strength of the taxpayer protections and the role of the car czar, said spokesman Chris Paulitz.

I think Wagoner is listening. It sounds like one of the ideas on the table is to eliminate Saturn Hummer, and sell Saab. LOL

I think they would welcome a so-called car czar....as long as it was somebody from washington and not from the industry so that this person will know exactly what the industry goes through. (Ok, this isn't what I've been trying to post for the past two weeks, but it's a start.)

Looks like the Senate voted down the bailout. Back to the drawing board.

http://money.cnn.com/2008/12/11/news...ion=2008121206

Thanks Muffy-TJ

Well, the adminstration approved 17 Billion for GM and Chysler, that will be a start, I hope both companies make the most of the opportunity in 2009. The terms were fair, and the money came from TARP, so no new debt here.

I am going to email my ideas to GM...