NINETY EIGHT REGENCY

For G.M., Better Cars, Worse Sales

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For G.M., Better Cars, Worse Sales

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DETROIT, Nov. 13 — This year, General Motors has been getting some attention that it isn’t accustomed to: warm reviews for its new cars.

American models are going head to head with foreign cars; the 2008 Malibu faces competition from a new Honda Accord.

“At last, a decent midsize car from General Motors,” Automobile Magazine said of a stylish new version of the Malibu. The new Cadillac CTS is “an excellent luxury sport sedan,” raved Edmunds.com, which praised the more powerful engines that G.M. has made available on the car. And in January, the Saturn Aura was named the North American Car of the Year by auto writers.

This is all a sharp contrast to six years ago, when the legendary product expert Robert A. Lutz arrived at G.M. to take charge of vehicle development. Back then, the company was selling cars and trucks that he admits — in his typical blunt-talking fashion — he never would have parked in his vast personal garage.

Now, he says, G.M.’s new models can be compared to the best that the company’s Japanese and German competitors have to offer.

The question is, Will enough consumers compare them — and choose G.M.?

Despite Mr. Lutz’s efforts, G.M. still has a hard time getting on drivers’ shopping lists. Its market share, close to 28 percent when Mr. Lutz arrived, has dropped to just under 24 percent, in part because G.M. has pulled back on unprofitable sales to rental car companies.

But there are other factors holding G.M. back, too, that may be hard to overcome despite the improved lineup of cars.

Perhaps the biggest challenge is changing the way consumers think about its cars. The idea that G.M.’s cars have been a disaster, even if the trucks were passable, “has been so ingrained, and so hard to change,” Mr. Lutz said.

Even he acknowledges that this may take another generation of vehicles to change, meaning well into the next decade — a long time for a company that has lost billions of dollars in recent years and whose competitors keep getting better, too.

“We have to be patient,” Mr. Lutz said. “It took us 25 years to work our way to where we were, and we can’t expect that to change in a year or 18 months.” Every well-received G.M. model helps to “eradicate those past perceptions,” he said.

Who’s to blame for those perceptions? Fingers are pointed in all directions.

Mr. Lutz cites the skeptical automotive media, gathered en masse today for the start of press days for the Los Angeles Auto Show.

G.M.’s dealers, for their part, have long complained that the company did not invest enough in advertising (though ads for the new Malibu seem to be everywhere, from World Series telecasts to episodes of “The Next Great American Band”).

“You have to get people into the showroom, and that’s a very hard thing to do, especially with the economy,” said Ed Schoenthaler, owner of Crossroads Chevrolet Buick in West Chicago, Ill.

Mr. Schoenthaler and other G.M. dealers say they are pleased with G.M.’s current lineup. But the public, he said, “has no idea how good these cars are.”

Some consumers still feel burned by their past experiences with American automobiles. Faced with numerous choices of vehicles whose quality is more consistent, as measured by J. D. Power & Associates and Consumer Reports, fewer buyers want to take a risk, as G.M.’s declining market share indicates.

Yvette Lazo, a special education teacher from Miami, said she had owned Chevrolets and Cadillacs but gave up on G.M. after a series of problems, including a dashboard that fell forward into the passenger compartment and a moon roof that came unglued.

Since then, the Lazos’ last six cars have been Toyotas. “We don’t need to be going to the shop all the time. There were always these things that irked you,” said Mrs. Lazo, 33, who gets a new model every two years.

For the Malibu and the CTS, G.M. made a particular effort to improve the interiors, which have “always been an area of extreme G.M. weakness,” Mr. Lutz said.

G.M. even released photos of the Malibu’s two-toned interior before it showed the exterior, which has a much more sporty and curved look than the previous version.

“I think we can look everybody in the eye and say, ‘Nobody in the planet makes a better midsize car than that,’” Mr. Lutz said.

But each model faces formidable competitors.

For the Malibu, it is the latest version of the Honda Accord, also fresh to the market. Ron Pinelli, the president of Autodata, an industry statistics firm in Woodcliff Lake, N.J., prefers it to the Malibu. “The new Accord is all there,” he said.

The CTS must combat a resurgent Mercedes-Benz, as well as BMW, whose sales are up this year while Cadillac’s have fallen. Mr. Pinelli says he is impressed by the CTS, calling it “awesome.”

Unlike the foreign brands, whose heritage has been honed over generations in Europe and the United States, G.M. must “earn their way back into the hearts and minds of the American consumer,” he said. “You have to have great products, you have to have the advertising, and the deal has to be there.”

This time, both Malibu and CTS are receiving the kind of relentless advertising push that Toyota regularly gives to its new cars and trucks. For instance, G.M. has kicked off a four-month $100 million advertising campaign for Malibu, hoping primarily to create awareness that an American company offers a car that can compete with Japanese models, said Mark LaNeve, G.M.’s vice president for sales and marketing.

G.M. did not do that with a car Mr. Lutz hoped would be one of the company’s stars, the Saturn Aura sedan. It has not said how much it devoted to the Aura, but Mr. LaNeve acknowledged to the trade publication Advertising Age that G.M. “could have spent a few more dollars.”

The model’s sales have stumbled this year, though it was named car of the year by journalists at the North American International Auto Show in January.

Other G.M. cars have suffered similar fates. Mr. Lutz was disappointed at the tepid reception among consumers for some G.M. models, like the Buick Lucerne, a large family car introduced in 2006.

It received good reviews — and good exposure, ending up as a prize on the Martha Stewart edition of “The Apprentice” on NBC. But Lucerne sales are down 14.5 percent this year. Likewise, sales of one of Mr. Lutz’s earlier favorites, the Pontiac Solstice sports car, have dropped 17.5 percent from 2006, despite a strong start.

G.M.’s biggest problem is erratic quality, said Jake Fisher, a senior automotive engineer with Consumer Reports. Though Buick scored better than average in the magazine’s recent quality survey, G.M.’s seven other brands were listed as subpar. Cadillac ranked third from last among the two dozen brands measured.

“G.M.’s making really nice cars,” he said, “but they’re losing in reliability.”

Another issue, analysts say, is G.M.’s proliferation of brands. Mr. LaNeve says its eight brands are an advantage. But Mr. Pinelli said the choices simply make it harder for individual cars to get attention.

G.M.’s sales are overwhelmingly dominated by Chevrolet. It has about 14 percent of the car market, making it larger than all of Chrysler, and only slightly smaller than the market share held by Ford and Toyota in the United States.

Most of G.M.’s other brands capture two points or less of the American market.

Even so, G.M. has been helped by good sales from its latest sport utilities, as well as the Buick Enclave, a crossover vehicle with S.U.V. features but carlike handling. Likewise, G.M.’s newest pickup trucks sold well when they reached the market, with the Chevrolet Silverado often outselling the Ford F-series on a monthly basis. The F-series will not be overhauled until next year.

But S.U.V.’s and pickups are fast losing popularity in the face of $3-a-gallon gasoline, while the car market, dominated by foreign manufacturers, is growing.

Mr. Lutz sees hope in the fact that the company seems to have stabilized at just under 24 percent, versus the 28 percent that executives vowed to attain when he first arrived, even donning lapel pins with the number.

“Twenty-four is the new 28,” Mr. Lutz declared, given the company’s decision to pull back on rental car sales and huge incentives, as well as the intense industry competition.

Long term, G.M. executives know the company needs to cloak itself in the same green mantle that Toyota enjoys, thanks primarily to the hybrid-electric Toyota Prius.

At Los Angeles, G.M. is showing hybrid versions of the Silverado and the Malibu. It is also promoting the Chevrolet Volt, a sedan it plans to begin building around 2010.

If all its new models succeed, and if G.M. can stabilize and perhaps increase its market share, Mr. Lutz said he would give himself a grade of A-minus.

At Chrysler, Mr. Lutz helped transform the company’s image during the 1990s through vehicles like the Dodge Viper and the Jeep Grand Cherokee. Then, consumers were rooting for the feisty underdog to succeed. That sympathy isn’t there this time, he said.

“It’s been tougher than I thought it would be,” he said.

source:

http://www.nytimes.com/2007/11/14/business...amp;oref=slogin

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Since then, the Lazos’ last six cars have been Toyotas. “We don’t need to be going to the shop all the time. There were always these things that irked you,” said Mrs. Lazo, 33, who gets a new model every two years.

Umm, it's not 1995 anymore.

At Chrysler, Mr. Lutz helped transform the company’s image during the 1990s through vehicles like the Dodge Viper and the Jeep Grand Cherokee. Then, consumers were rooting for the feisty underdog to succeed. That sympathy isn’t there this time, he said.

“It’s been tougher than I thought it would be,” he said.

That's because america, for all intents and purposes, doesn't exist anymore. It's a 'melting pot' of other cultures that mostly hate the 'old school' american mindset.

Edited by FUTURE_OF_GM
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“You have to get people into the showroom, and that’s a very hard thing to do, especially with the economy,” said Ed Schoenthaler, owner of Crossroads Chevrolet Buick in West Chicago, Ill.

This dealer is in a so-so area, and far from most of the car buying population in Chicago area. the town of West Chicago is 28 miles from the actual city. GM needs to move stores like this to growing areas.

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“I think we can look everybody in the eye and say, ‘Nobody in the planet makes a better midsize car than that,’” Mr. Lutz said.

Bob Lutz the great overstater. Malibu is good, but the best in the world?! Hmmm... :rolleyes:

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None of this matters any more. TOO LITTLE TOO LATE.

Two Chevrolet stores closed this month in Toronto. General Motors ( or at least Oshawa) has lost all grip on reality. First, they have hollowed out the center core of the city. Now, nearly a million customers are free to buy Toyota, Honda or even Chrysler because GM does not have a single dealer in the center of the city. If BMW can build a palace on the main highway into downtown Toronto - WHY THE HELL CAN GM NOT HAVE ONE SINGLE DEALER ANYWHERE NEAR DOWNTOWN?

Addison on Bay closed in March (once the largest Cadillac dealer in the country) and then the last dealer in the core of the city (Somerset) closed two weeks ago. I live downtown and I can tell you, everyone drives imports here - but now my neighbors have no choice.

Under the category of BE CAREFUL WHAT YOU WISH FOR, with the Opel product going to Saturn, it has put the final nail in the coffin of Chevrolet in the GTA - Canada's largest car market. When I was job hunting a couple weeks go (and frantically trying to stay in the GM family), I spoke with the GM of a 'major' Chev store in the west end. I have never heard such doom and gloom. The day of the Malibu launch, and here he was crying to me that they are a 'small store' that only delivers 45 new cars a month. Why, I asked myself?

None of these dealers give a damn because they have already run for the hatches years ago. Running down the list of dealers in this city and nearly all of them own Acura, Hyundai, Toyota or other imports, so they have GIVEN UP. GM does not seem to have a grip on what has happened to Chevrolet. First, the dealers were promised the GM-DAT product was to compensate for the loss of the Oldsmobile line, then Pontiac got the Wave, we had to share the Aveo with Suzuki, the Epica also went to Suzuki, and the final insult: the XL7 is what the Equinox should have been.

Without naming names, I can tell you that something stinks about the way that P-B-GMC gets what it wants around here.

QUESTION OF THE DAY: Why does the company with the worst CSI score, with the worst track record for firing managers on the spot, get a new franchise? Things that make you go HMMMM.

Personally, from what I have witnessed in the past month or so, General Motors deserves to get flushed.

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What about a GM Megastore in DT Toronto with maybe a storage lot somewhere with slightly cheaper realestate?

The megastore here in Pittsburgh is new and very very nice. 7 brands in 4 buildings. Pontiac/Buick/GMC in one building, Hummer in it's own space, Saab and Cadillac share a building but each side of their building is unique and joined together by a combined service department, and Saturn in a building by itself.

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Umm, it's not 1995 anymore.

That's because america, for all intents and purposes, doesn't exist anymore. It's a 'melting pot' of other cultures that mostly hate the 'old school' american mindset.

Perhaps they[/i] can't stand the ignorance that is displayed by someone who doesn't realize that America is a nation of immigrants?

I wouldn't be surprised if you were grown from seeds or crawled from the remnants of an ancient swamp---but I bet somebody in your family tree probably hopped off a boat or plane from, gasp, somewhere else---thus becoming part of the melting pot you decry.

You don't even know your own history! How can you be taken seriously on any level? Anywhere?

Edited by enzl
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Leave that bickering in that thread, Enzl. Don't take it elsewhere, especially when it has absolutely nothing to do with this present topic.

I would've expected you of all people to have a more cogent, thoughtful response on this subject. In fact, I was looking forward to reading it when I clicked this post. I'm disappointed to see you just want to attack someone instead.

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Leave that bickering in that thread, Enzl. Don't take it elsewhere, especially when it has absolutely nothing to do with this present topic.

I would've expected you of all people to have a more cogent, thoughtful response on this subject. In fact, I was looking forward to reading it when I clicked this post. I'm disappointed to see you just want to attack someone instead.

I'll edit it...but he's still a moron....

Hey Fly---is your family from somewhere else? How about any of the other mods? It's BS---and you know it.

Since I don't want to disappoint, I'll get back on topic:

As I had stated days ago, the GM one step forward, two step back machine is now in full force. Product is now good--but they've shown how their marketing and sales efforts are still not up to snuff. It's no wonder that they're getting little traction, as the powers that be cannot have vehicles on the ground when ads gear up---the Volt is now officially an '11, at best, the housing market slowdown has caught them by surprise, they're killing the SRX to bring out an Ultra-Vue, their buddies at Delphi are readying a request for more monies GM doesn't have...I mean, how crappy do things need to get to have some sort of action by GM's board?

The ultimate irony will be that GM sinks like the Titanic with the best line-up in its history.

Time for some new blood at the helm---Wolfgang is available? Someone, anyone other than Rick would be fine with me.

Edited by enzl
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None of this matters any more. TOO LITTLE TOO LATE.

Two Chevrolet stores closed this month in Toronto. General Motors ( or at least Oshawa) has lost all grip on reality. First, they have hollowed out the center core of the city. Now, nearly a million customers are free to buy Toyota, Honda or even Chrysler because GM does not have a single dealer in the center of the city. If BMW can build a palace on the main highway into downtown Toronto - WHY THE HELL CAN GM NOT HAVE ONE SINGLE DEALER ANYWHERE NEAR DOWNTOWN?

Addison on Bay closed in March (once the largest Cadillac dealer in the country) and then the last dealer in the core of the city (Somerset) closed two weeks ago. I live downtown and I can tell you, everyone drives imports here - but now my neighbors have no choice.

Under the category of BE CAREFUL WHAT YOU WISH FOR, with the Opel product going to Saturn, it has put the final nail in the coffin of Chevrolet in the GTA - Canada's largest car market. When I was job hunting a couple weeks go (and frantically trying to stay in the GM family), I spoke with the GM of a 'major' Chev store in the west end. I have never heard such doom and gloom. The day of the Malibu launch, and here he was crying to me that they are a 'small store' that only delivers 45 new cars a month. Why, I asked myself?

None of these dealers give a damn because they have already run for the hatches years ago. Running down the list of dealers in this city and nearly all of them own Acura, Hyundai, Toyota or other imports, so they have GIVEN UP. GM does not seem to have a grip on what has happened to Chevrolet. First, the dealers were promised the GM-DAT product was to compensate for the loss of the Oldsmobile line, then Pontiac got the Wave, we had to share the Aveo with Suzuki, the Epica also went to Suzuki, and the final insult: the XL7 is what the Equinox should have been.

Without naming names, I can tell you that something stinks about the way that P-B-GMC gets what it wants around here.

QUESTION OF THE DAY: Why does the company with the worst CSI score, with the worst track record for firing managers on the spot, get a new franchise? Things that make you go HMMMM.

Personally, from what I have witnessed in the past month or so, General Motors deserves to get flushed.

Interesting... I never would have noticed that these Toronto dealerships closed!! :scratchchin:

Seriously.. I drive. Why would I go to a dealership with a higher cost of operation and therefore likely a higher markup, right in downtown Toronto? I do my car shopping in Brantford and Pickering.

Not saying that there shouldn't be dealerships in downtown, but I'm just saying even some of us who live here would never choose to shop here.

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We're talking about service operations. There were many, many people who would drop their vehicles as Addison for the day to have it serviced while working on Bay St. Now, if you lived dowtown would you shop GM if you had to drive to Scarborough or Etobicoke for warranty work? Not on your life!

As to your shopping in Pickering - you don't know how many people felt the opposite. The truth is, the average 'gross' between a group of dealers in the same market varies by no more than $100 a vehicle. Don't believe the BS from your 'beer buddy' who brags about the $5k he saved by driving to Orangeville. Whenever I hear crap like that, I challenge them to produce their bill of sale. Amazingly, they shut up.

GM is abdicating the entire core of the city to the competition. People who live downtown will not fight traffic for 20 minutes to have their vehicle serviced. It is one thing to drive to Burlington to BUY a car, but who would want to do that to service the vehicle.

BTW, Dart: if you fail to see the benefit of servicing the vehicle where you bought it, then you are naive, indeed. I have interceded on behalf of MY customers on many, many occasions. I even got the General Manager to rebuild a Z24 transmission out of warranty, at a cost of $2,400 to us.

Anyway, all of that is moot. I am no longer selling new GM. Our dealer has been converted to a used car Superstore and we can now happily import cheaper Amercan vehicles across the border and funnel all our dollars across the border.

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Woah, I just found out about Somerset yesterday. I went there to see what 08 Malibu's they had, and was greeted with an empty parking lot. Crazy stuff!

I worked there just before it changed over from Parkwood. It was a $h!ty location, but what the hell, it was minutes from the core.

Courtesy in Etobicoke is still a great dealership IMO. At least its accessible by highway.

I just had service done there today. Very nice showroom and facilities.

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i went to drive through my PBGMC lot on sat. only to find that that morning they swtiched the sign and places with the toyota dealer down the road. now toyo gets the huge big new building and PBGMC is forced into a tiny place which was originally a BMW dealer.

kinda made me sick.

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i went to drive through my PBGMC lot on sat. only to find that that morning they swtiched the sign and places with the toyota dealer down the road. now toyo gets the huge big new building and PBGMC is forced into a tiny place which was originally a BMW dealer.

kinda made me sick.

There's a lot of that going on. This is accelerating GM and Ford's downhill slide. Many of these dealers own more than one brand, and since GM/Ford are out of fashion, they are jumping ship faster than rats off the Titanic. This is the problem with American/Canadian business in general: nobody at the top is accountable because they have their golden parachutes and f$%k the guys/gals at the bottom.

When GM/Ford dealers were making tons of money, they bought up import franchises for a song. Now that they taught Toyota, Nissan, etc. how to sell vehicles here and things are getting a little tough, everyone is jumping ship. Nice loyalty.

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I don't know how things are working in your areas but here in Ohio this is what is up.

GM has too many dealers just as Ford does and losing a few here is a benifit more than a problem. Larger dealers are buying up the small dealers and setting up Mega dealers in prime areas.

One such dealer just north of Kent In Streetsboro Ohio is even being used in GM advertising as it is an example of what GM would like see in the future. The Govener of Ohio even was at the opening.

This dealer like most of the GM dealers are leaving downtown areas as the inner cities are dead to most new car buyers.

GM has required many dealers to relocate on state highways and interstate highways to be more available to the the commuters.

As for Service work. Most dealers here will drop you off at work and pick you up. Many will even give loaners win little problem if it is a longer service issue under warranty. You don't have to beg as in the old days.

In general if you can find a Wal Mart there is a GM dealer near by.

Also many dealer here have Saturday and late week night hours several days a week.

In General in the Akron Cleveland and Canton area after 6 PM no one oges down town and most dealers in those areas are moving to where most of the people live.

The way I see it since GM is no longer 50% of the market why do they need a buch of weak small dealers when they can help owners build fewer big dealers just as Honda and Toyota have near highways.

The New Toyota/Scion dealer here was one of just a few prototypes Toyota helped build to show the others what they want. It is nearly the same as what GM has just built. We also have a Honda dealer doing the very same thing on a interstate just outside of town. Ford here has not built any new dealers but they are forcing some of the smaller dealers to sell out to the larger ones and combine. There was just not enough sales for all the Ford dealers here to survive.

Note as they are building new Toyota and Honda dealers they are not adding to the number of dealers we have. These dealers are just old dealers with new buildings.

Less dealers selling 25% of the market is only smart as GM will never regain 50% share as compitition is growing each year from countries well beyond Japan.

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There is a new Chevrolet Dealership at the corner of Eglinton and Laird in Toronto. The core has not been abdicated, will not be abdicated. And a successful new Chevrolet sales person (with great CSI) is ensconced there.

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