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GM CEO defends Detroit 3 in light of declining SUV and pickup sales

 
5 950 views Jun 6, 2008

GM CEO defends Detroit 3 in light of declining SUV and pickup sales

GM CEO defends Detroit 3 in light of declining SUV and pickup sales

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Despite having to drastically cut its SUV and pickup truck production in North America and shutdown several plants, GM CEO Rick Wagoner has defended criticism that Detroit’s carmakers have relied too heavily on SUV and truck sales and have been reluctant to develop more compact vehicles.

Speaking with the Financial Times, Wagoner pointed out that Japanese carmakers spent more than a decade trying to compete in the fullsize SUV and truck market, singling out Toyota, which he claims spent billions of dollars to develop and market its Tundra just before demand for such vehicles died.

Light trucks still accounted for more than half of GM’s U.S. vehicle sales last month, compared with just over a third for Toyota, but with analysts predicting further declines in truck sales it appears Toyota is much better poised to weather the tough conditions than GM.

Still, Wagoner believes the criticisms his company, as well as Ford and Chrysler, is receiving is unfair. “It’s not just the ‘Big Three’,” he told reporters.

Earlier this week, GM revealed its new restructuring plan which called for major production and job cuts for SUV and pickup models, development of a new small car and efficient turbocharged four-cylinder engine, development of the new Volt plug-in hybrid and the possibility of dropping the Hummer brand.



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Comments (5)

  1. By chris Posted: 6/6/2008 9:24am PDT

    hes got a point. people wanted big SUVs.. and the big three made the best ones. If research into climate change started suggesting that CO2 is actually good for the atmosphere and that it's actually cooling things down and encouraging plant growth, oh and by the way, we have centuries of oil left,.. you'd see everyone buying SUV's to encourage the oil production industry and green efforts, and the foreign brands would be ridiculed for being unprepared.

    Every brand has big and small vehicles. some brands have big vehicles as their strengths, and some brands have little vehicles as their strengths. the analysists said that gasoline prices would rise, and everyone knew that hybrids and fuel cells would be needed one day. the big three had been researching this stuff since the mid 90's.. but no one ever expected the market to shift so rapidly. you have one of the biggest industries in the world, literally changing over night.

    It's not like these companies don't have small cars, it's just that they dont offer small cars that are quite as appealing as other brands (maybe its the price, the quality, who knows, doesnt matter). they now have to shut down plants because they know full well you cant just take 5 truck plants and turn them into "car" plants and expect to sell 1 million malibus every year. the demand just isnt there for their small products. so GM will slash their own market share and invest more heavily in smaller cars.

    it's supply and demand. how many black smiths do you think went hungry when the gun smith came to town?
     
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  2. By Gus Posted: 6/6/2008 10:06am PDT

    Agreed.
    There just isn't that much of a market for cars, period. I know a guy who works as a salesperson for a Honda dealership, and he said sales are down across the line, not just the bigger vehicles.
    What I do blame the big three for is not putting those large vehicle profits to better use. They were like homeowners with big equitylines of credit who maxed their homes out during the good times, and are now crying...
     
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  3. By chris Posted: 6/6/2008 10:55am PDT

    well.. invest where the market is.

    I think it's fair to say that $4/gallon right now means you're guaranteed some high quality sub compacts and compacts from the american 3 in the next 2-3 years. nearly certain. they used to say there was no profit in building small cars like that. there will be when everyone wants a small car so they dont spend $100k in operating costs on a truck in 5 years of ownership. and people will pay a premium for it too. This is what the market needs. consumers willing to pay decent money for a small car. pay decent money for quality, not quantity. with rising basic costs, american culture will shift. Canadian culture was already a step in that direction compared to american culture, simply because our commodities are more expensive. they always have been. the same is true all over the world.

    In some way's im glad it happened this quickly because it caught them so far off guard, the reaction is bound to be overkill, which only means good things for us, the consumer.

    Who knows, we might turn into europe and have mid sized cop cars instead of full sized.
     
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  4. By Roy Posted: 6/6/2008 2:18pm PDT

    I'll believe a prioritization of small cars when I see it. Why? Because this also happened about 30 years ago. In fact, that was when the small, high quality, cheap Japanese cars that were available then really started to penetrate the US market. Did the Big 3 learn? No. They were back to building gas guzzlers within a few years. That is why they're being criticized.
    Toyota may have spent large amounts of cash (billions? Hmm, one billion maybe, but not multiple billions) developing the Tundra but AT THE SAME TIME they were investing similarly large amounts of money in the Prius. Now they've got all their bases covered. Meanwhile, Ford went out to acquire luxury marques, hoping to turn a huge profit (luxury cars have the highest margins). They gambled and lost. Chrysler got acquired by Mercedes in order to improve quality across the board. That was a gamble because MB didn't do their due diligence to understand exactly what they were getting. They lost. And GM...? They were busy KILLING the Impact and launching mainstream Hummers. My conclusion is not that the Big 3 weren't taking risks, it's that they weren't being conservative enough. They were very busy doing very short term planning and they weren't taking a long-term view.
    It takes some audacity to say they were just following the leader when the reality is that they were just moving as fast as they could down a blind alley. The real leaders are taking an aerial view of the maze and and are giggling as they become the largest car manufacturers in the world.
    Wagoner needs to go and I think he's only just realized it.
     
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  5. By shortroot Posted: 6/6/2008 6:39pm PDT

    I think Kirk Kerkorian made the right decision by selling his shares in GM. The mind boggles at how incompetent GM can be. They seem to have one disaster after the next, and even if it isn't their fault, they are the ones who end up looking stupid. Let's hope that the Volt blows everyone's socks off. Not all the problems are caused by GM, but they haven't helped themselves.

    Rick Wagoner needs to go +1
     
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