ON THE TABLE #448

June 4, 2008

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George Fisher. He is GM's lead independent director and the guy who continually insists GM is on the right path and that Rick Wagoner is still The Man. Get a grip, George. You and your band of board of director cronies have presided over the dismantling of one of the last great American companies of the 20th century (GM clearly is already just another car company in this new century) in less than a decade. That your fellow board members' incompetence and blind, go-along-to-get-along posture has ensured that GM's road to financial ruin has been a swift one fails to resonate with you on any level, apparently. GM deserves better. Much better. It's time for a complete and total transformation of GM's board of directors, starting with your exit.

GM. Talk about watershed moments, GM's U.S. market share in May fell below 20 percent for the first time since the automobile manufacturer was founded in 1908. GM finished the month with a 19.1 percent market share, a shocking figure. Toyota came in with a 18.4 percent market share in May, only 0.7 percentage points behind GM. 

GM, Hummer Dealers. Publisher’s Note: GM announced yesterday that it was “undertaking a strategic review of the Hummer brand to determine its fit within the GM portfolio.” Not only that, they said, “At this point, the company is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand.” Now, I know most people consider Hummers to be all bad, all the time, but that really wasn’t or isn’t the case. We happen to like the H3 and the Hummer brand for a lot of reasons. GM waltzed in and took the title of most competent off-road vehicle right out from under the Jeep, while Chrysler’s then Daimler execs were asleep at the wheel. As brand launches go, the Hummer was the most successful launch from a domestic automaker since the Saturn and the advertising - especially the “Happy Jack”-tracked spot - was superb. The brand had a character that stood out from the sea of sameness that drives much of this country’s auto population. Many might not have agreed with it, but it did have a distinct personality all its own.

But it was clear 30 months ago that the H2 was dead in the water, soon replaced by the H3 because of its smarter size and appeal. But even the H3 had severe limitations in that its weight (4700 lbs.) was too much for its 5-cylinder engine, despite subsequent horsepower improvements. The reason I was cautiously optimistic for the Hummer brand was that GM showed an H4 concept to the media in December of ’06 that was off-the-charts cool (it became the Hummer HX concept displayed in Detroit last January). If this was the future of Hummer - a lightweight, compact, 4x4 with small, efficient 4-cylinder turbo power or even a small turbo-diesel - then yes, I could see a raison d’etre for the brand. But now that GM is scrambling to put everything they’ve got into bringing fuel efficient cars and lighter-duty crossovers to market, putting dollars behind an all-new H4 program is a giant non-starter, so one option actually on the table is to consider jettisoning the brand altogether.

This is GM’s lack of visionary thinking at its finest. Launch a brand, nurture a brand and then bail at the first opportunity. Instead of green-lighting an all-new H4 Hummer two years ago that would have positioned the brand correctly for the higher fuel prices that we’re dealing with today, what does GM do? They announce a Hummer H3T pickup truck at the Chicago Auto Show last February that we roundly criticized here at AE for being yet another Answer to the Question No One was Asking. And wasn’t it not too long ago that GM made its dealers invest huge amounts of money into the Hummer corporate “Quonset hut” look for its dealerships across the country? And now, with the first signs of trouble, GM is actually floating out the idea that they might just walk away from the brand entirely? What a bunch of unmitigated bullshit. If I were a Hummer dealer who had just spent millions upgrading my dealership on GM’s suggestion, only to find that these jokers were considering pulling the plug on the brand instead of making it right for these fuel-conscious times, then apoplectic wouldn’t even begin to cover my seething disgust. As a matter of fact, you can bet that there are Hummer dealers around the country preparing their lawsuits as you read this. If GM lets Hummer go, or runs it into the ground, or whatever ugly scenario they undertake, yes, a lot of green-tinged zealots out there will be pleased. But if GM had been smarter and had adapted the brand to a fuel-conscious future, it could have had a place in the automotive spectrum around the world as the off-road capable vehicle to have when needed. Not good. - PMD

(GM)
The Hummer HX Concept.

GM. The ugly High-Octane Truth about GM’s vaunted new crossovers, the Buick Enclave, GMC Acadia, Saturn Outlook and soon-to-be-online Chevrolet Traverse? The real-world mileage in urban driving is all of a sudden a big concern to GM’s execs. Rated at 16 in the city and 24 on the highway, the vehicles, when compared to something on the order of a Tahoe or a Suburban, do just fine for most consumers. But now that the bloom has shriveled on the SUV rose, the real-world mileage of 13–16 in stop-and-go driving in the city is giving consumers more than a little pause. When GM designed and engineered these large crossovers, their mileage was a noticeable improvement over traditional full-size SUVs, while being just as roomy inside. But with a curb weight pushing 5,000 pounds, more efficient powertrains aren’t going to be enough, so GM is now in the throes of considering a plan of action to put these vehicles on a serious and much-needed diet.

GM. How bad is it out there right now for GM? The company's May sales were down 27.5 percent, with a stunning 37 percent decline in truck sales. GM sold 268,892 vehicles last month, down from 371,056 in the same month a year earlier. The American Axle strike contributed, but the sudden collapse of the SUV and light-truck market is the real culprit.

Honda. The bad news in Detroit isn't confined to GM, by any means, as the consumer shift away from trucks and SUVs takes its toll. The Ford F-150 pickup - which had been the best-selling American vehicle since October 1991 - was eclipsed by the Toyota Camry and Corolla, as well as the Honda Civic and Accord in May. Ford sold 42,973 F-series trucks last month, while Toyota sold 51,291 Camrys and 52,826 Corollas. Honda sold 43,728 Accords, up almost 32 percent. Honda also led all makes last month by selling 53,299 Civics, an all-time record for the company.

Chrysler. Our AE Headline of the Week goes to the Detroit News for this one from yesterday's paper: "Gas offer not pumping sales" referring to Chrysler's $2.99-a-gallon gas promotion. Chrysler's May sales are down 25 percent over a year ago. Which proves yet again that when you have the wrong product mix at the wrong time, it doesn't matter how many smoke 'n mirrors marketing tactics you employ, people don't want what they don't want. Time to fire-up the ol' "Jimbotron" so we can hear yet another long-winded explanation from Jim Press as to why this latest Chrysler sales gambit isn't working.

Cerberus. The Financial Times report about Chrysler selling equity positions in GMAC and Chrysler LLC was denied, but anyone who thinks these guys aren't sweating this whole auto industry adventure is kidding themselves. They're worried, and hedging their bets or bailing out of the deal all together is an idea that has been definitely moved from the back burner to a prominent position on their radar screens at this point.

Buzz Hargrove. The CAW union chief screams bloody murder and taunts of "betrayal" over GM's upcoming closing of its Oshawa truck plant while threatening a strike or legal action. Maybe if you weren't such a relentless pain in the ass for so long GM may have closed a different plant, eh, Buzz? You had this one coming, and now your rank & file membership will know exactly who to blame this time. You reap what you sow, as they say. As a matter of fact, Buzz, you're entitled to it.

The State of Michigan and the City of Detroit. GM is seeking tax breaks and incentives so it can build the Chevrolet Volt electric car at its Poletown plant. Not unlike Asian or European manufacturers seeking tax breaks and incentives to build plants in southern states, GM is seeking help from its homeys to build probably the most significantly pivotal car in its history right here in the Motor City. Will the State and the City team up and do the right thing? You'd think it would be a no-brainer, as they say, given everything that's going on right now, but then again when we're talking about Gov. Jennifer Granholm and Mayor Kwame Kilpatrick, two of the most ill-equipped and overmatched politicians in the country, all assumptions of rational thought and effective decision-making have to be set aside until further notice.

AE Readers. Thank you for all of your kind words about our ninth anniversary last week. We tried to respond to all of the email, but then on Thursday our email server crashed and was out of commission until Monday afternoon. But thanks again.

(Photos courtesy of Ford)
Lincoln aims to get back into the luxury game with its all-new full-size luxury flagship, the MKS, which will feature a ton of Ford's latest advanced high-tech features, including include SYNC™ voice-activated, hands-free in-car communications; Easy Fuel™ capless fuel filling; THX-certified audio; SIRIUS Travel Link™; voice-activated navigation; and a next-generation keyless entry keypad. The new Lincoln is powered by a 270-hp 3.7-liter V-6 (with 265 lb.-ft. of torque), derived from the 3.5-liter V-6 found in the Lincoln MKX (voted one of Ward’s 10-Best Engines for 2007). A 6-speed automatic transmission with SelectShift gives the option to manually select gears and all-wheel-drive will be available. Less than a year after launch, the Lincoln MKS will be the first vehicle to offer Ford’s new gasoline turbo direct injection engine technology. The premium engine will make the Lincoln MKS "the most powerful and fuel-efficient all-wheel drive luxury sedan in the market," according to Ford. The 2009 Lincoln MKS will be priced at just below $38,000 and is available for ordering right now at www.lincoln.com.