The Last GM Makeover Attempt Didn't Go So Well

The Big Three CEOs have arrived in Washington to ask for a reported $34 billion bailout, presenting viability plans for using that money. But the viability plans are the subjects of heavy media and public skepticism. The New York Times reported today that GM's Saturn brand represented a failed makeover:

General Motors has promised Congress that it can recreate itself as a different kind of car company -- smaller, with a more cooperative relationship with its union, and a lineup of fuel-efficient cars to compete with the best of the foreign brands.

At least G.M. knows how difficult the challenge will be.

A quarter-century ago, G.M. started Project Saturn with the same goals. And it worked, for a time. Saturn owners, including many who traded in their Hondas and Toyotas to own the first models in 1990, became cheerleaders for the division's customer-friendly approach, while the United Automobile Workers union gave up many of its traditional restrictions to help Saturn succeed.

Memories of that makeover attempt cold be churning the stomachs of the CEOs as they ask Congress for money they say is urgent. But the urgent need for money now leads some to believe that the automakers' bankruptcy is imminent:

The news shows that there is a growing admission that putting $20 billion or $30 billion into car firm rescues won't cut it.

According to Bloomberg, "General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout."

No one should be shocked. The two companies say they need money in the next three weeks to stay in business. Getting any closer to a Chapter 11 filing or a Chapter 7 liquidation would be impossible.

Comments

[mcamp52]

They started Saturn from scratch; building new factory with new assembly methods; all new brand of cars that were supposed to usher in a new era of U.S. car manufacturing. They had the chance to do everthing right and instead, they blew it. Blew it big. That's the GM way. I feel so sorry for the hard working people who are devistated by the downfall of GM, but its not our problem. It's GM's problem. And if they can't solve it, it's still not our problem.

[Blurp]

My car for the past four years is a Ford. No problems, good quality. Before that was a Honda Civic, in the shop quite a bit. Quality or "perception of quality" concerns aside, as a nation we cannot let an industrial base like automobile production just die. This issue is greater than some petty "these companies have been mismanaged, are not on the cutting edge, etc... so they deserve to fail." For reasons of national security, the economy as a whole, national industrial base, and skilled workforce the big 3 can't be allowed to die.

[KillTheMessenger]

You didn't say how old the Civic was when it had to have repairs. Are we comparing an old car against a new one? Right.

"as a nation we cannot let an industrial base like automobile production just die"

Why not? Do you see us making television sets? Why do you think that is? Because we sucked at it. And the Japanese and Koreans don't. So by your own argument we should have propped up the tv set makers for the past twenty years. Right?

[Blurp]

Why not?!?!?! Because we don't produce anything in this country anymore except for debt! Because everyone isn't meant to be a g.d. paper-pusher. Because when we continually cede industry and technology to foreign shores we drive down our quality of life and assure failure for future generations of Americans. We're becoming a country where fewer and fewer engineers and scientists are produced, while we're chock full of young people whose only goal is to be a "celebrity" of some sort.

Perhaps you're too young to remember when we dominated electronics like televisions. They were pretty good, too. We didn't "suck" at it. We decided to sell out our fellow workers to save a few bucks and gave that industry up to Japan and now Korea and China.

By the way, both cars were new.

[KarateKid]

BS

[Blurp]

BS How?

[IntrepidReader]

Seriously, VW Jettas are among the worst cars on the road--read what carsurvey.org has to say about them.

I am fascinated by the ease with which some people can pretend the facts don't exist. In this case, they're pretending that Detroit built cars that nobody wanted, when the truth is that buyers were scooping up SUVs and trucks as fast as the Big 3 could churn them out. Those ubiquitous gas-guzzlers seemed to be in every driveway and parking lot, and it was a status symbol to have a tricked-out Expedition or Tahoe or even better, an Escalade or Navigator.

As for banks not making loans, I notice that our local BB&T branches have resorted to banners across the front of the building that proclaim they are lending money; other banks have radio ads to tell customers the same thing. Car dealerships advertise that they have lenders ready to underwrite loans on new vehicles. They're having to resort to this because the hysterical media has the public convinced that there are no loans being made to anyone.

My prediction is that as gas gets even cheaper and incentives, discounts and rebates stay large, the sales of SUVs and trucks are going to go back up because they're a bargain right now.

[KillTheMessenger]

So because there are poorly made cars by foreign manufacturers, US cars are magically good? Where is the logic? Nowhere.

"and it was a status symbol"

You should have emphasized "IT WAS". Sadly, they lost money even on those products.

"the sales of SUVs and trucks are going to go back up because they're a bargain right now."

Which is of absolutely no help to the US manufacturers who lose thousands on each vehicle sold. You can't stay in business by selling more of a product you lose money on.

[mlaiuppa]

I used to own a Saturn. Then GM bought it.

I own a Prius now.

[Tweet]

But you don't say why Saturn failed.

I suggest GM buried it because profits were so much higher on SUVs and trucks. Saturn could have been a success if attention had been paid.

And by the way, calling it Saturn was a silly move. Cars which sell either have numbers as names or a made up name like Acura or Lexus. Naming a car something which actually exists raises nightmares of Pintos.

[mlaiuppa]

When I was shopping for a car in 1996 I was offered a chance to lease an EV1. I told the salesman I don't lease, I buy. Could I buy one. He said no. I bought a Saturn SC2 coupe instead.

Saturn was independent. The GM took over and imposed their business model on Saturn. After that the quality of everything went down.

When I looked to replace my Saturn in late 2004 I went to Saturn first. Even took a test drive. There was NOTHING there I wanted to buy. I bought my Prius in April of 2005. I'll buy another. I'll never buy a GM.

I would have bought the EV1.

Someday I'll buy an EV. But GM won't be making it.

[frankp37]

This is an interesting comment because it shows how people relate to Detroit. I know someone who worked on the ev1. You met a salesmen who leased them, and this is what people associate with the car. Salesmen typically aren't even working for the car company. The decision to lease them is now considered the most important but within the company the bigger decisions had to do with the multi-billion dollar development cost. With the price of oil so unpredictable there was no way to know if the car would be worthwhile. Probably the government should have put up the funding. I suppose GM did make some mistakes, but another way of looking at it is there's an intense selfishness in this country. These people who wanted to buy the car didn't lose anything. I know the people that worked on it were disappointed because it was their whole career. Strangely no one bothers to talk to them. Since they still work for GM they wouldn't likely attack it, which seems to be what certain people want. It's actually very similar to the old union mindset where you hate the boss, except you're not a worker who put his life into it.

[PhilipTaylor]

One Major "TRICKLE DOWN THEORY" Think Tank is Driving the Charge Against the Big 3!

The Heritage Foundation, a conservative think tank who took a leading role in Reagan"s TRICKLE DOWN movement, is leading the attack on the Big 3. There goal is to BANKRUPT UNIONS and they had their analyst on MSNBC making the argument against the Auto Loans.

We must recognize that this group is biased and is for FUNDING of the RICH over the Working Class!

[KillTheMessenger]

Just because the Heritage Foundation is against bailing out the big three does not mean we should.

Or do you always do the opposite of what someone says you don't like?

[PhilipTaylor]

Grandiloquent best summaries your many short comments!

We lost over 500,000 jobs this month (worst in 50 years) and 1,500,000 so far this year!

Letting Lehman go bankrupt caused a lose of confidence and caused this CRISIS to spiral down and the market TANKED!

So you appear to be willing to take the chance that losing 3 million auto related jobs!
With a multiplier of at least 4 that is 12 million jobs and probably a Depression!

[PhilipTaylor]

Why do we reward the RICH and Corrupt Banksters and Penalize the Honest Working Man? It seems counter to the Goals of the Founders of our Great Country. In fact, isn't that why they fought and formed this country?

I thought the Big 3 did a LOT BETTER THAN PAULSON did with his 2.5 Pages and we gave him $350 Billion or $160 Billion per page. The Auto Makers want $34 Billion. Per page there is no comparison and the Auto Makers provided hundreds of pages of facts and financial information. That is $0.094 Billion per page!

[KillTheMessenger]

The length of a business proposal has nothing to do with its merits. If you ever tried to get money from a VC, you would know that.

[PhilipTaylor]

The 2.5 page Paulson plan was thrown away! The Banksters still got $350 Billion.

The point is Auto Execs did their work and it was decent according to many in Congress and they did four days of review by Congress and BUSH SAID NO! The Banks did ZERO!

This is simply class warfare as the BANKS SHOULD HAVE BEEN ALLOWED TO FAIL!

I have run a technology corporation for 33 years so I know about funding from a VC!

[Rapid Ray]

Look, we can all grip about or defend why we own whatever cars we have in our lives. It practically become a national past time.

The bottom line is that none of the US auto makers has managed to survive this long without importing foreign technologies or outright making foreign cars and changing the name tags.

Dodge Colt - Mitsubishi Mirage
Matrix - Ford Fusion
etc

This has been going on for decades, yet the big three keep screaming they don't have an even playing field. If so, it's becuase they left the field somewhere between muscle cars and hybrids. Cranking out J-cars, Aries K wagons and Mustang 2 models sure as hell wasn't competitive. it was just more failed makeovers that were insulting more than they were just plain fugly rides.

We as a nation need to get past the love affair of our cars as status symbols and trips into nostalgia and demand that Detroit do the same. We need cars for the future, not those that keep us tied to the failed past.

[SangZe]

My only new car was a VW bug. The worst problem I had was the destruction wrought on the exhaust system by the salt used on Maine highways in Winter. After 7 years, I had to replace the engine. It took me four hours and cost me $125.00. The car ran another 5 years before I traded up to a VW bus (I had kids by then.). The bus eventually became a chicken coop. For all I know, it still is.

[WasteNJ]

Bugs rock.

[KarateKid]

Hippie

[Veri]

I see many comments about the quality. And The Big Three, through decades of poor quality, deserve the reputation of suck-*ss automobiles.

Follow the link down the rabbit hole and you will have but one piece of the puzzle as to why The Big Three should fail. Or more of your future earnings will go to prop up failed philosophies. Communism collapsed. Why do you think that Western Capitalism should not collapse itself?

http://en.wikipedia.org/wiki/W._Edwards_Deming

[Mschmal]

I have to reply to this because this is just plain wrong.

If you go out and buy the just released Consumer's Reports Cars Best & Worst 09 magazine, the car on the front with the caption "top Rating in reliability" is the Ford Fusion.

Ford has 16 models on 2009 IIHS list of safest new cars and trucks, more than any other manufacturer.

It was only three years ago that Ford sold over 900,000 F-Series pickups...and GM sold about the same number of pick-ups. The pickup market tanked at the same time the construction and housing collapse occurred. The dire straights of the big three is a result of the economic catastrophe engineered by the republican administration.

IF an auto maker goes bankrupt, the Tax payers will still have to play unemployment to upwards of 3 million people. The government will also have to take over the BILLIONS in retiree health care that the Detroit 3 pay out of their own pockets.

The fact of the matter is that the Republican administration has dug a huge hole and like it or not we have to deal with what IS not what we wish WAS.

Mark

[planetjeffy]

It is not about reliability, it is about perception of reliability and build. American cars don't feel solid and Japanese cars almost never break down.

However, at this point, it is about design and offering. American cars are ugly and their small / fuel efficient cars are krap. Toyota is on their 4th generation hybrid, while GM still does not have a true hybrid on the market. GM knew the price of oil was going up while they were building and pushing more Hummers. They deserve to go bankrupt.

[quantumspin]

With no income OR credit that is reasonable (not the 22% APR variety) Americans will remain unable or unwilling to buy cars.

Credit has propped up price levels in all sectors, including cars.

I'd love to get a Volt, but can't afford it. So I will drive a cheaper used car that I can pay cash for.

[planetjeffy]

GM is placing their whole revival on a 40K plug in hybrid? They are out of their mind.

[Beantownbadboy]

That about sums up this whole bailout scam. These guys just don't get. It's over.

[vedder110]

If you want a Volt, you know nothing about the Volt.

http://www.youtube.com/watch?v=QPlwxeAGsKM

[mapleaforever]

Why is it that Ford's best achievements come from its partial ownership in Mazda? The Fusion, Edge and Flex are all Mazda designs (Mazda 6, Cx7 and Cx9). What is Ford NA doing?

[WasteNJ]

Ford Europe created the Contour and Focus, the SHO Taurus had a Yamaha motor. I think lately though the US companies have had a few competitive offerings, just too little too late. I know people may feel like the big 3 don't deserve it, but the banks got a hell of a lot more after they helped cause the financial crisis in the first place. It's people we're talking about here at the end of the day..

[unionave]

What I do not understand is we all know cars and everything else are not going to be bought if THIS ADMIN TELLS THE BANKS TO STOP LENDING . WHY IS THE MSM AND THEIR GOP PALS BLAMING THE LABOR FORCE OF DETROIT FOR THE LACK OF SALES OF DETROIT PRODUCTS ?

[Clayton139]

It was the Bush/Cheney/Rove administrations 8 year policies that, has cause this Economic Crisis/Meltdown that, created one for the fragile big 3 Auto Industry ! I have a New Chrysler but, I will admit the big 3 Auto's have been behind the curve on the designs, MPG, and technology of the Automobile industry that has made them more than fragile also, to the Bush economic meltdown. (Technology can get our large Autos to get 100 MPG by using warmed up gasoline - vapors) ! WOW ! Wouldn't that work and help to sell Auto"s ! (100 MPG !)
It is not the UAW's fault if, we were building the right Auto's. But, with the UAW's cost structure adds to the cost of an AUTO industry as it is now ! I don't think they will ever survive unless the UAW takes a real equity stake in the company ?
There are easy answers if our government would allow CAFÉ mileage to go as high as we can take it ! Problem solved ! I think our government is holding back the technology for our USA"s Big 3 to increase MPG of our Auto"s by using gasoline and warming, containing, sensoring, to a (100 MPG) ! Everyone that has invented the technology has been bought out with a disclosure agreement ! Hush !

[Clayton139]

YES ! A Chapter 11 Re-Re-structure ! Make them move to future technologies ! It's going to be bad even if the Taxpayers help ! Look at Saturns -- Whoopi....?

(100 MPG) !
Why, Why don't we make the AUTO Companies make vehicles to change to the technology
(to heat, or warm gasoline from the engine temperatures, to vapors, contain it, sensor it, like all the other technologies of AC and heater and all other component's of the engine with fuel injection that is pressurized, and as said

(run the vehicle off of pure vapors from the gasoline and (get 100 MPG) !

and possibly do add-ons to run older vehicles also ! If we just do the new ones would be a big change ! Warmed gasoline vapors are mixed to a way higher mixture of air to gasoline ratio, and it is a lot more explosive to run a vehicle farther and take less gasoline to do it ! So all we do is contain it, sensor it, and burn it to get (100 MPG) !

This technology was proven in the last oil embargo with just carburetors to get (100 MPG) !

I had a Lennox furnace that had a precision cast part chamber called a pulse furnace to run like a motor sparked by a sparkplug to heat the chamber and pressurize it and it heated my home too !

[zer0rez]

How many miles? I missed it.

[KillTheMessenger]

I would suggest you take a class on thermodynamics.

[Viper]

The Illusion of Quality!
Perfect example. Toyota and GM in California produce the same car.. a Corola. Yet the one with the GM label is rated much lower by Consummer Report.

Regards

[JeffersonState]

People that exaggerate how great their import is, is a method to deflect the fact that their patriotism does not extend to the purchases they make.

[walk0nwalls]

And why would patriotism influence my purchasing decisions when i can barely scrape by as is?

Fact is the foreign companies have a long history of greater reliability and better service and bertter car designs all around.

The Mazda RX-8s? Love em.

The last American car design I was actually interested in was... none.

[zer0rez]

Reliability vs. patriotism. Good luck with that.

[mapleaforever]

Actually you're talking Vibe (Pontiac) and Matrix (Toyota). Same line, different perceived quality.

[mcamp52]

No, not perceived quality - real quality. Consumer Reports knows every nut and bolt in every car they test. They know exactly where the car was made and how it was made. Vibe and Matrix are not the same. All the crappy parts go into the Vibe. You know crap; like all the other American cars out there.