General Motors & Ford-It?s the cars ?Stupid? part II
Copyright 2006 Richard Stoyeck
We've already stated our belief that that 2007 will see Americans buying several hundred thousand less cars than they will purchase in 2006. We are looking for 16.8 million vehicle sales this year. Let's get into the numbers, and see what the implications are. When you, or I buy a car for our personal use, we pay on average about $25,000 per car. The car rental companies in the United States purchase more cars than any other group.
They buy American cars, and pay an average of $15,000 per car. We don't see any big profits from this market segment.
Let's look at the dealerships, and sort out how the Japanese do against the Americans. A Chrysler dealer last year on average sold about 225 cars. If you were a Ford dealer, you averaged almost 700 cars per dealer. GM's Chevrolet dealerships came in under 650 cars per dealer.
Would you be surprised to learn that Toyota sold more than 1600 cars per dealership last year?
Now you know why American car dealers are complaining and going out of business. In the last year GM lost 200 plus dealers while Ford lost 40, and Chrysler lost more than 110. This is happening on our home turf, folks. This is not the Japanese and the Americans slugging it out on European soil for control of European markets. This is the American consumer choosing to buy Japanese over American made products on American soil.
People are voting with their feet.
Here's the next big question. If American car dealers are closing their doors at this rate, what kind of shape can the rest of them be in? Can the owners be putting big bucks into their dealerships while their friend's dealerships are folding up? We think not. Will the friendly banker be willing to finance their car inventories when the bank sees other domestic dealers closing their doors? We don't see it. This means that American car dealers can only finance through the car manufacturer's financing arm, and that's not good when the dealer has only one choice. We estimate that half of Ford's dealers are not making a penny.
We think for General Motors, it could be as high as 25% are unprofitable. What's the customer experience going to be like in a dealer that's losing money on every car he sells? Is anybody listening in Detroit?
Every time GM loses a point of market share, they have to implement plans to dismiss 20,000 people from their jobs. We see the necessity for GM to cut another 60,000 jobs that they haven't announced to establish break-even 12 to 18 months from today. With all the talk about GM in the news in the last 60 days, has anybody at GM or Ford uttered a word about their real problem, QUALITY? The American consumer does not want to buy American made cars in any quantity that would allow Detroit to make money.
We believe that GM will be unprofitable until 2008 at a minimum, and 08 can only be profitable if they maintain market share, and we see continued declining market share. The Chairman has verbalized nothing that deals with the issue of quality, and upgrading the consumer's consciousness to consider GM cars when it comes to quality.
Even Mercedes marvels at Japan's ability to produce the quality they do for the dollar it costs. Mercedes doesn't understand how Japan does it at their price points.
We took a close look at Ford (where "Quality is number 1", and "Ford has a better idea"), and found their restructuring plan isn't substantial enough to get the job done. They call it the "Way Forward Plan". We call it the "Lost in the Wind" plan. They are taking total charges of $3.4 billion in 06.
They expect to be profitable in 08, why, we ask? What's going to change between now and 08? They believe they can save almost $6 billion in costs. We don't see it, and if they were able to do it, don't you think Japan would jump on the bandwagon and do whatever they have to do to drag their already low costs lower.
Did you know that when GM, or Ford produce an interesting car, Japan buys the car immediately, rips it apart, part by part in Japan, and than takes any interesting technology and applies it to their cars almost immediately. Japan can put out a car in one-third the time it takes GM, or Ford to design a car by committee. South Korea can go from design to showroom in even a shorter time span.
Ford's restructuring efforts in our opinion are clearly overstating the bottom-line results. We see a headwind coming, where Ford thinks it's got a tailwind at its back.
It's going to get tougher for Ford, and this is being overlooked because GM and its troubles are getting the headlines. With the employees departing from both companies how do you think the guy down on the assembly line is feeling? Do you think he's a loyal, lets get it done type of individual? Do you think he's wondering if he's going to be there 2 or 3 years down the road? Will his pension benefits be safe? Will he ever get a pension? Will he even have a future at either of these two companies that were once the unquestioned leaders of American managerial know how?
Henry Ford wrote the book on manufacturing, and GM's Alfred P. Sloan wrote the book on building a company that is still studied at Harvard Business School, and MIT today. Somehow in the last 3 decades, the bean counters in Detroit forgot how to make cars. They literally forgot what business they were in.
They instead thought only about the money. Labor became a cog in the wheel, not an integral meaningful partner in the process. To turn this American industry around will involve a different level of intelligence than the intelligence (used advisedly) that got them into trouble in the first place. Einstein was right.
Goodbye and good luck
.
Love Vintage Cars? Get An Instant Used Auto Loan
Cars are no more an item of luxury. They have become more of a necessity nowadays. You wish to purchase a car but are short of money. You have explored the loan market and have realized that you actually can't afford buying a new car. What would you do in such a situation? Will you curb your desire? One solution for all such problems is instant used auto loan.
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Used cars > Love Vintage Cars? Get An Instant Used Auto Loan
World Leaders Bring Back Electric Cars
The fate of electric cars seems to be sparking still and not completely gone. This is primarily because soon enough, electric cars would again be on the streets and roads. Well, not exactly for every day use and for ownership, but at least, they would be used by world leaders of leading industrialized countries and democracies. Maybe there is hope, after all.
These leaders would include those who lead countries like the United States, Russia, Britain, France, Japan, Germany, Canada, as well as Italy.
They would be using the electric cars during the G8 Summit. This summit would be held this summer, July 15th to the 17th in St. Petersburg, Russia. GEM electric vehicles would be the ones to be used by these country leaders. And in part of such a big event, the government of Russia under the supervision of their president, Vladimir Putin, took part of the budget to purchase thirty GEM electric vehicles which could take in four passengers inside its cabin ?...
World Leaders Bring Back Electric Cars
Used cars > World Leaders Bring Back Electric Cars
Dodge Concept Cars For Auction
If you are one of those few who do live to search the world over for unique and one of a kind vehicles, then you might want to take part of this upcoming auction. You see, there would be a pair of Dodge Firearrow vehicles that would be put up for auction during the 36th annual Barrett-Jackson Collector Car event.
The 36th annual Barrett-Jackson Collector Car event would be held on the 13th of the 21st of January come the following year. This is according to a statement that the organizers of the mentioned event released just last Friday. And as per the pair of Dodge Firearrow vehicles, it would be quite an interesting fact to know that these are actually concept cars and are convertibles.
They have been built in the 1950s and they are the only ones that were built during that period that are still in a more than good condition. Sure enough, these vehicles would be in mint condition and will come still bearing the original Dodge...
Dodge Concept Cars For Auction
Used cars > Dodge Concept Cars For Auction
Ferrari, Lamborghini, Rolls-Royce and race cars display at American Le Mans Series "Festival of Speed" at World Financial Center Winter Garden.
NEW YORK, NY (ContentDesk) June 25, 2004 -- The inaugural AMERICAN LE MANS SERIES "FESTIVAL OF SPEED" will take place on Wednesday, June 30th from 10am-7pm at the World Financial Center Winter Garden in lower Manhattan. The event, featuring exotic road cars as well as racing sports car from the American Le Mans Series, is sponsored by Manhattan Motorcars, Ray Catena Imports, Premier Financial Services and Miller Motorcars and is free to attend.
Festivities begin Wednesday as a select group of 25 exotic cars and motorcycles take positions on the plaza of the prestigious Winter Garden at the World Financial Center. The World Financial Center overlooks the Hudson River and is home to some of the world's most prominent corporations including both American Express and Merrill Lynch.Exotic cars placed for display include the Rolls-Royce Phantom, Bentley GT Coupe, Lamborghini Gallardo, Lamborghini Murcielago, Porsche GT Carrera, Ferrari 360 Spider and other high-end exotics. Aston...
Used cars > Ferrari, Lamborghini, Rolls-Royce and race cars display at American Le Mans Series "Festival of Speed" at World Financial Center Winter Garden.
RC Cars - Not All of Them Are Innocent Toys
There are several factors to consider before choosing which type of rc cars to buy. "Don't just jump in head first", says Michael Holland, creator of www.rc-car-fun.com, a new Web site dedicated to radio controlled cars and trucks. Making the correct choices, up front, can save you a lot of time and money down the road. First, it is important to determine who will be the primary user of the cars. This will help ensure that you don't start off with a car that is far beyond the child's ability to operate.
Choosing the right starter radio control car can often mean the difference between building a long-lasting family hobby, or having one more piece of plastic ending up in the toy box. If the intended user is a young child, say under 13, then you might be better off purchasing the relatively inexpensive mini rc cars that run on batteries. Not only are they inexpensive (often selling for under $20), but they are safe to operate...
RC Cars - Not All of Them Are Innocent Toys
Used cars > RC Cars - Not All of Them Are Innocent Toys
Memory Foam ? Worth the Money, or Just another Sales-Crap?
Wondering Why so Many People Talk about Memory Foam Mattress? Lets See if its Worth Your Attention.
Everybody wants and needs a quality and comfortable sleep at night. If you cant relax your muscles during a sleep, then youll feel worse and worse every next day.
For a person to feel energetic and actually relaxed, she needs a quality nights sleep. But the problem is that regular coil spring mattresses cant give the comfort a person needs. Many people complain after... General Motors & Ford-It?s the cars ?Stupid? part II mattress Used cars
Used cars > Memory Foam ? Worth the Money, or Just another Sales-Crap?
An Insiders Guide to Smarter Indiana Mortgage Refinancing Shopping
Indianapolis, IN (ContentDesk) April 13, 2006 -- Finding the right Indiana mortgage company can be a daunting task, but Chris France of CFIC Home Mortgage offers tips on navigating through the confusing maze of banks, mortgage brokers, and mortgage bankers:"???Seeing Is Not Believing -- Many companies will publish unrealistic Indiana mortgage rates and closing costs just to make the phone ring. It is important to find out whether the closing costs published are all closing costs or just the mortgage...
General Motors & Ford-It?s the cars ?Stupid? part II mortgage calculator An Insiders Guide to Smarter Indiana Mortgage Refinancing Shopping Used cars
Used cars > An Insiders Guide to Smarter Indiana Mortgage Refinancing Shopping
Plasma Entertainment Centers
Plasma TVs are fast growing in popularity as the myths around their short life span gradually dissipate, more and more people are now enjoying the fruits of this latest technology.
Studies indicate that that you can increase the viewing life span of plasma TVs by the way you install them. This has ushered in an era of plasma TV entertainment centers whose designs and features specially cater to increasing the length of usage of the plasma TV.
In fact, plasma TV centers...
Used cars > Plasma Entertainment Centers
NoteFix: Many Laptop Repairs Connected to Power or Video Symptoms
NoteFix (www.notefix.com), a division of Pre-Owned Electronics and a national leader in laptop repair, has identified the top two most common notebook computer problems reported by users, based on repairs of over 20,000 laptops. These two issues are power problems and laptop video symptoms.The remedies for these two major issues include a variety of repairs. Computer power problems can translate to a bad AC adapter, a bad battery, a battery...
General Motors & Ford-It?s the cars ?Stupid? part II NoteFix: Many Laptop Repairs Connected to Power or Video Symptoms Used cars
Used cars > NoteFix: Many Laptop Repairs Connected to Power or Video Symptoms
How I Met My Angel
Today I was in rather a whimsical mood, and so instead of my usual "how to" article, I thought I'd create a fairy tale for the child within you to enjoy. When I was just a young soul, on my first incarnation to be a human being, I wasn't sure that I wanted to go to Earth School. I felt so happy here, in Paradise. I did what I liked and I never ran out of time. I played with my friends and we made art by mixing colors out of rainbows, and made music by waving our hands in certain ways in the wind,...
General Motors & Ford-It?s the cars ?Stupid? part II Used cars
Used cars > How I Met My Angel