Tuesday, June 02, 2009

I Am Debbie Downer

Sigh, why the long face. GM went into bankruptcy and could not have asked for a better news day then when an Air France jet disappears in the Atlantic. It was a media miracle for GM, the stuff their PR team dreamed about. A headliner that trumpted GM's bankruptcy story. Obama had a press conference at noon on Monday to put a positive face on the whole thing. Gee, bankruptcy is not that bad after all. We should all do it.

There are a few things that will not work and I want to point them out well ahead of time. I like to take credit. GMC Truck needs to go along with Pontiac, Saturn, Saab and Hummer. Buick has value but needs to be folded with Chevrolet dealers. Buick only has three vehicles in their lineup. Unfortunately GM decided to merge the distribution channel of Buick, GMC and Pontiac years ago to consolidate roof tops. They did not plan on going under then. Chevy/Buick dual stores make since. Their price points do not collide on product. Cadillac will go it alone, but it's going to be tough. Those dealers barely sell more then Lincoln which is dueled with Mercury.

Buick/GMC is targeting an upscale customer. GMC trucks command a price premium, but they are the same vehicle as a Chevrolet. GMC has offered the upscale Denali series on it's truck and Chevrolet does not. But Cadillac sells upscale trucks in the GM stable. Give it up GM, it's time to put the kiss of death on GMC too. Best to do this now then go through another reorganization to kill off a division. By then no one will have any confidence in your company. Now is your chance. You can always sell upscale Chevy trucks, Ford does that with the King Ranch series. And they did not need a separate brand to do so. The day of the uber-luxury SUV/truck is limited with new CAFE regulations.

I warn you about the government taking over your new car warranty. Yes the government has pledged to back it. But warranty items can be gray. Concessions are made to please the customer, something the government is not likely to do. The government does not want your future car business.

It was kinda silly this week that when Ford announced it was upping production 10%, it had to apologize for doing so. The press asked if they were being opportunistic in the wake of the GM/Chrysler bankruptcy filings. Well hell yes they are taking advantage of the situation. They are not getting bailed out by the government and they need to make that up. In our new wave of socialism, we have forgotten this is still a free-market economy. You gain your market share where and when you can. We need to be empathic to distressed industries and companies, but this is not a first grade soccer game where everyone gets a trophy.

A Chinese firm bought Hummer today. They will close the deal in the fourth quarter of this year. The Chinese are coming and they are brutal competitors. We owe them so much money we cannot shut out their product policy wise. We can only not buy it. I'd like to think we have a social conscience in this country but then again we can't stay out of Walmart to save our lives. We ignore the safety issues with Chinese made products, but will we continue that thought process with our cars?

On the bright side, Lincoln sales are up 2% over May of last year. You say Huh? It's the return of the Lincoln Town Car to the line up. Town Car rules!

I'm happy again.

1 comment:

QB said...

Let's all go out and buy a Ford! We can turn Debbie's frown upside down!