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Investors Say GM Must Off One Brand

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INVESTORS SAY EVEN MORE CUTS ARE NECESSARY

By Michael Ellis and Joe Guy Collier

Detroit Free Press


DETROIT - What will it take for General Motors to return to profitability? According to the experts on Wall Street, the automaker must do a lot more than just cutting 30,000 jobs and idling 12 plants in North America, which the automaker announced this week.

Not until GM gets rid of at least one of its eight U.S. brands, weathers difficulties at its largest parts supplier, Delphi, and forces its unions into more concessions will the automaker win back favor with investors, they say.

They also want GM to cut more of its manufacturing capacity. In other words, idle or close even more plants.

GM's dramatic announcement Monday of job and plant cuts sent shivers through Detroit, but elicited only yawns on Wall Street.

``We were underwhelmed by General Motors' big announcement of future plant closing and job cuts,'' Shelly Lombard, a senior research analyst with Gimme Credit in New York, said in a note to clients Wednesday.

Wall Street's ho-hum reaction was reflected in GM's stock price. Its shares closed Wednesday at $23.52, down from a closing price of $24.05 last Friday.

``We acknowledge that a journey of a thousand miles starts with a single step, but at this rate GM will never get to the land of milk, honey, fat EBITDA, and bonds that trade at par,'' Lombard said. Her reference to EBITDA is a financial term meaning earnings before interest, taxes, depreciation and amortization.

GM Chief Executive Officer Rick Wagoner said Monday that the cost-cutting plan, combined with a deal to cut health care costs and other measures, would save a combined $7 billion annually, and help the company return to profitability.

But he would not forecast when GM would stop losing money.

Full Story: http://www.mercurynews.com/mld/mercurynews...ss/13254818.htm
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Serious investment cash is going into each and every brand at this point. On top of that, these wall street nut jobs are asking GM to rehash the Farewell Oldsmobile episode, the one that Mark LaNeve just recently said GM still hasn't recovered from.

Crap, if you think GM is a junk dealer, why don't you start trading its shares like one? Just start charging 2 cents a share for GM stock. It could be a moneymaking opportunity.

Imagine the shock and horror among this group if Ford decided to off Jaguar, or (just for argument's sake) Toyota dumped Lexus.

They don't care about Buick, Pontiac, Saturn, or any GM brand for that matter.
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I still maintain that if the just ditch the hohum sheet metal for exciting innovative designs and keep production of the best sellers under control most of the year they wont have overstock,which would stop shut downs.The quality is in place!Stop sitting on your laurels GM and get with the program. Hybrid tech in the HHR,Cobalt Malibu,Lacross,G6,vue,ion, Colorado and lambda platform(all) as an option to compete,o hell across the board,why not have hybrid on all cars and trucks!Pull $3.00 an hour for insurance like the rest of the workforce. NO MORE BONUSES FOR SUITS!!!PERIOD!!!!! Until profitability returns! Yes I realise im just stating the obvious.BUT, if it is so obvious why don't they see it?!?!?Ditch the jobs bank @ 95% pay. no one else that I know is still using 1970 business plan stratagys.Fair trade agreements HAVE to be faced .When the opposition is using ultra cheap labor the should be made to compete on a equal playing field or they can NOT import their goods to us! signed, Mr Obvious :angry: Edited by prototype66
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Each GM brand represents a vast dealer network, a terrible asset to lose. GM shouldn't forget as it cuts capacity that avoiding losses in bad times is only part of the strategy - being able to reap the rewards in good times is even more important. Brand engineering lets GM sell similar products to different demographics. It expands the market when times are good, and helps retain marginal sales when times are tight. I agree with those that believe GM's fundamental problem is a shortage of really good designs. That's changing, but as important as a new deal with the UAW is a class-leading RWD platform for mainstream sedans. Edited by Jazzhead
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Each GM brand represents a vast dealer network,  a terrible asset to lose.    GM shouldn't forget as it cuts capacity that avoiding losses in bad times is only part of the strategy - being able to reap the rewards in good times is even more important.  Brand engineering lets GM sell similar products to different demographics.    It expands the market when times are good,  and helps retain marginal sales when times are tight.

I agree with those that believe GM's fundamental problem is a shortage of really good designs.    That's changing,  but as important as a new deal with the UAW is a class-leading RWD platform for mainstream sedans.

[post="48197"]<{POST_SNAPBACK}>[/post]


exactly!
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Pikachu, I choose Saabaru (if we had to kill any brands). I like Saab, but not over Cadillac and the others. They have (had?) potential, but it went to useless rebadges and their products are aging.
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Too bad all the Wall Street types stuck their noses up in the air on the way to the M-B, BMW and Lexus dealers...and now these jerkoffs suddenly know what would fix GM? They are only concerned with what would help their portfolio.
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Too bad all the Wall Street types stuck their noses up in the air on the way to the M-B, BMW and Lexus dealers...and now these jerkoffs suddenly know what would fix GM? They are only concerned with what would help their portfolio.

[post="48211"]<{POST_SNAPBACK}>[/post]


That's the point I was trying to make.

These guys want GM to do better so that they can trade up to that S-Class Mercedes... And they wonder why GM is unprofitable.
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It disappoints me that Wall Street and others are so insistent on having one of GM's brands become a sacrificial lamb. I honestly see GM working its way out of this mess, if they do it right and pay no mind to negativity.
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I don't get the suggestion to cut a brand. Many GM brands outsells so many other brands out there. If GM has to cut something, it should sell Saab. Saab lovers want it to be independent anyway, and its sales in the U-S are extremely weak.
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Saab is going to break even soon according to GM so what would be the point of dropping it? What GM needs to do is continue to merge Buick, GMC, and Pontiac into one dealership and offer unique niche vehicles that aim at different parts of the market. They can do it but GM needs to hurry the hell up.
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If GM has to cut something, it should sell Saab. Saab lovers want it to be independent anyway, and its sales in the U-S are extremely weak.


I couldn't agree more! I don't think these analysts are being fair here. How long ago did they announce their B-P-G plan? I hardly think GM's gotten the ball rolling on that plan, let alone reaped any sort of dividend from it. I don't think the BPG grouping is a bad plan at all: it lets GM keep all of it's historied brands and let it reduce vehicle overlap & the badge-engineering everyone's complaining about (but apparently isn't an issue for the MDX/Pilot or the etc, etc, etc). Saab definately is a different animal of sorts. GM received a LOT of negative press when they removed Oldsmobile from it's lineup. But the sale of it's stake in Subaru? Hardly gathered attention. Matter of fact, more attention was paid to who bought it as opposed to GM selling it's interests. I think Saab would gather a similar response -- especially since it isn't a long-standing GM brand.
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Unfortunately, GM's servitude to it's investors does absolutely nothing to help the problem of selling cars now..not when "all this great stuff" finally hits the dealer's lots. "Opening your tent" to the press, investors, and analysts so that they can see what's on the way does nothing but stagnate the units sitting on the ground. For example...cars like the Solstice and Lucerne should have been out 8 to 10 months ago instead of hitting the press circuit for what seemed like forever.
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GM just needs to get cool vehicles to the marketplace, pronto! Cutting a brand will hurt more than it help. Customers of the brand to be cut will go elsewhere, and the bad press will hurt GM overall. Imagine the headlines if they cut Pontiac: "World's Biggest Automaker Cuts Performance Division" Buick: "World's Biggest Automaker Cuts its Highest Quality Brand" What are buyers supposed to think? It will make GM look weak, no matter what brand they would cut. In the U-S, those two brands outsell Mercury, Lincoln, Infiniti, Lexus, Acura, Saturn, Saab, Mercedes and BMW. What f--in sense does it make to cut a brand?
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Saab is an easy choice to dump. It's never made money, and it has promised profitability for years. It's nothing but a costly distraction to GM. It's hard to see any future in Buick. It's products don't appeal to new buyers and I don't see that changing. Mark
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Investors, analysts.... they're all idiots if you ask me.

[post="48228"]<{POST_SNAPBACK}>[/post]

We are sort of analysts in our own right, you know.

Granted we don't get paid for our opinions...
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Ive said it before and ill say it again. You dont dump an entire division! You streamline each division and drop copycats and dead wood. If three or four division make esentially the same car, take the best of all and condence into one or maybe two cars. If it has a truly loyal following, they dont care what division its under, especially if they see its greatly improved and retains the features that drew them in to begin with. The next step would be of course, GOOD PR AND REALLY GOOD DISCRIPTIVE ADVERTISING!!!imp of corse
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I hate to be harsh but, if GM must off a brand it should be Saab. Saab is the least useful brand for GM. Saab has potential but,Buick should be GM's Acura so to speak. GM should sell Saab to DCX or anybody who'll buy it. GM needs cash. I don't think GM needs to kill or sell any brand.
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