Monday, April 6, 2009

GM has their rally caps on

General Motors has started to run television ads, asking Americans to ‘put on their rally caps.’ What is most disturbing about this message is that management of GM might really believe that wearing an inside-out baseball cap will turn the company around. Make no mistake, there has been no attempt by management to actually repair any of the crippling problems sinking the company over the last handful of years. I suspect they have used up all the lucky rabbit’s feet that they purchased with our tax money and are now turning to other forms of superstition to save their jobs. GM’s strange behavior is not limited to the last few weeks. It is instead a pattern of behavior suggesting their lack of judgment. Permit me to highlight some specific examples of GM’s insanity.

GM has not turned a profit since 2004, that’s four straight years of losses. GM, no longer able to pay their bills, decided to “restructure.” But wait, that’s not entirely true. It was only as a contingency of government support that GM produced a plan to revamp the company into something that will survive in the future. Apparently, GM management thought four years of poor results were not enough to warrant a rethinking of their strategy. After the GM plan was reviewed, President Obama fired the CEO of GM. We can infer from this action, that GM consulted neither reality, nor accountability, when they formulated their plan. I guess things were not bad enough yet.

Let us not forget GM’s focus on the relevant issues and technologies of the time. Our world is faced with global warming, depleting petroleum reserves and the worst economic downturn since the great depression. Seeing these issues GM management turned their attention to crafting something that would solve all of those problems-the Corvette ZR1!

The Corvette ZR1 is GM’s brand new top of the line, high performance super car. The ZR1 is based on the already high performance Corvette coupe and has been engineered to compete with the likes of Ferrari, Lamborghini and Maserati. The 630 horsepower ZR1 can keep up with many of the neighborhood super cars that the 430 horsepower standard Corvette couldn’t quite catch. And the ZR1 is only double the price of the standard Corvette, and way cheaper than any comparable Ferrari or Lamborghini, for those who are budget conscious. For the environmentally conscious the ZR1 gets 14 miles per gallon (MPG) city and 20 MPG highway. That’s like planting a tree every time you floor the throttle. The sheer irresponsibility of focusing resources on a pet project, during a time of crisis, is indicative of GM management’s lack of judgment.

There is a compelling reason for GM not to focus on small to midsize economical cars for ordinary people. They are good at making big cars. Remember the Pontiac GTO of the 1960s, big engine, lots of power. It started the muscle car era. It was probably one of GM’s greatest successes. GM was good at making big powerful cars.

On the contrary, GM is not good at making small cars. The 1970s saw conditions similar to today, high gas prices, new environmental rules and poor economic conditions. This era saw some of GM’s humblest moments attempting to make small economical cars. Does anyone remember the Chevy Vega or the sporty Chevy Monza. Those cars were so bad their tales can be used to scare auto executives the way the boogyman is used to scare small children. GM does not want to repeat their bad experience with compact cars, and who could blame them. Its not like Toyota, Honda, Nissan, Volkswagen, Renault, Fiat, Hyundai, Kia, Mitsubishi, Mazda, Ford, and Chrysler have decent compact cars right?

How about GM’s lackluster attempt to make a fuel efficient car? GM does market several “hybrids,” which are nothing more than gasoline powered cars with modest electric boost. The hybrid Chevrolet Malibu gets 26 MPG city/34 MPG highway, the hybrid Toyota Prius gets 48 MPG city/45 MPG highway, while the hybrid Honda Civic gets 40 MPG city/45 MPG highway. I guess GM missed the day hybrids were taught in auto engineering school.

GM has indicated that the technology is not yet available to make an effective electric car. But wait, GM did engineer a famous electric car, way back during the 1960s. GM engineers designed the lunar rover, the electric car that transported astronauts across the surface of the moon. Let us step back and put this into perspective. GM engineers designed an electric car that survived launch in a giant rocket and a trip to the moon. The car was then driven across the dusty lunar surface in the vacuum of space, quite a feat of engineering. Hasn’t GM learned anything new about electric cars since then? Consider that the entire history of the personal computer took less time than has elapsed since the lunar rover. I guess GM got upset when the astronauts left the rover on the surface of the moon, instead of bringing it back for a trade-in.

These examples highlight what appear to be poor judgment, ineptitude, and most of all poor management by those running GM. If the government intends to save the company, there will have to be many more management changes. It remains to be seen how deep the surgeon’s scalpel will have to go, before the patient can be saved, I suspect it will be deep. Hopefully, someone with accountability can be found to make the cut.

Monday, March 9, 2009

Buying Tires, Sears Sucks! and STS Tire Center are Awesome!

There comes a time in a person's life when the tires on their vehicle just don't pass muster anymore. This time for me, came in February of 2009. The front tires of my 1992 Chevrolet Camaro were so worn on the edges that I was expecting steel belts to start unraveling as I drove. Air was being held inside these tires only by fear of the unknown. It was time for new tires.

So, I did what any self respecting car nut would do when looking for tires, I went to I selected the kind of tires I want: high performance all-season, and started down the list. Goodyear? Their tires just suck- I had a set of Goodyear Wranglers on my Jeep XJ-it was like driving through KY Jelly. Really, they were that bad. Firestone/Bridgestone? They explode on contact-usually along with a Ford Explorer--no thanks. Kumho tires are way too cheap ($43), I don't trust them-they might be great but I'm not taking that chance. I believe you get what you pay for. Michelin tires? I had a set of ordinary all-season Michelins on the Camaro and they were ok, but I wanted something better. Michelin did have a better tire, Michelin Pilot Sport ($192), but they were the twice the price of anything else. If they were that good, then they are worth it. I had a set of Michelin Cross Terrain truck tires on my Jeep (replacing the KY Goodyears) and they were awesome tires. So Michelin-maybe. BF Goodrich (BFG)? They rated as good as the Michelin tires on Tirerack's survey, but they were a lot cheaper like $130 a piece. These days that's real money! I was still leaning towards the Michelins, I had Michelins on all my cars and had good experience with them. But something about the BFGs kept nagging at me.

After sleeping on the decision, something I do with all big decisions, I got back on was still undecided, though leaning Michelin's way. I decided to do more research, so I stared at a screen-size picture of each tire for a good 20 minutes, not surprisingly this yielded no decision. Next I thought more numbers would help. I had already looked at the survey, but this was an opinion poll, I needed more reliable data., once again came through! Have I mentioned that is a fantastic resource for tires, they are, and their prices are great. As I was saying... had also run actual tests of each of the tires I was considering. A short read through the results (lap times, maximum cornering speeds etc.) made it absolutely clear, the BFG tires were the best by a mile! Specifically, the BFG G-force Super Sport A/S tires.

So now I needed to find an installer to get the tires mounted as there is no lift in my apartment. I had always had my tires installed at Sears Auto Centers, so I figured I would check them out. I looked for the tires on their website, and they were there-ready to install at your local Sears. It all seemed easy enough right? Wrong!

When I arrived at my local Sears Auto Center (Hicksville, NY) my tires were not on display. In fact, half the tires on their site were missing. I asked one of the sales if they had the tires, he looked at me like I was asking for monster truck tires. He checked his computer and came up with two or three tires for my car. I asked if he could order them since they are on the Sears website, he said he had no clue how to order them. I suggested the Internet! No response.

He then asked me why I wanted those particular tires. I answered that they were very good tires. No response, no clue...nothing! Sears couldn't get the tires that they advertise (and had on sale) for me. Sears SUCKS! The Sears salesperson did one redeeming thing- he suggested I try STS Tire Center across the street. Even Sears know they suck! So I did try STS. Sears lost a loyal customer that day, I won't be back, neither should anyone in the NYC-Long Island area.

Despondently I drove to STS Tire Center, while only long-term friendships kept the air in my worn out tires. STS was the opposite of Sears. Upon entry I immediately asked if they had my tire, they responded without hesitation, that it was a special order, and that it took a day to acquire. That was a good sign, they could order the tires in just a day-less than 24hours. The price was a bit higher than Sears, but STS actually had tires, not to mention it includes balancing and all the other incidental charges like waste disposal. So I ordered my tires to be installed the next day.

The next morning STS called to let me know that the tires had arrived and asked when I would come in, I said around 10 AM. I rolled up to STS on rubber filled with small wisps of air, and they immediately set to work on changing my car's shoes. An hour later my tires were on, the car had been aligned properly and was ready to go. I paid my bill, thanked the technician with a tip and set off to enjoy the fantastic ride of my new tires. A couple of days later, I received another call from STS, asking how my tires were and if everything was to my satisfaction. Top notch service! STS Tire Center at the Broadway Mall in Hicksville, NY-you are awesome!, you as well are awesome, and my BFG G-force Super Sport A/S tires are awesome as well! Sears, you still suck!

All's well that ends well.

Wednesday, March 4, 2009

Alfa Romeo Coming to America

In this time of great turmoil and unrest in the U.S. automotive market, a detachment of foreign special forces seeks to assault our shores. Their specialty is not armed or even hand to hand combat. Their specialty is automotive design. They are Alfa Romeo.

The legendary Italian maker of sporty and superbly designed cars is seeking to extend its reach. A subsidiary of European automaker Fiat, Alfa is eager to bring the cars that have recently made Europe swoon to the largest market in the world, the U.S. With models like the sensuous 8C sport coupe, and the dashing Brera coupe and 159 sedan, they are sure to turn heads everywhere they go. Americans haven’t seen curves like these, on and Italian import, since Monica Belluci.

For those who are unfamiliar with Alfa Romeo, before Ferrari patriarch, Enzo Ferrari manufactured his famous red race cars, he drove racing Alfas. Established in 1910 as Anonima Lombarda Fabrica Automobili (ALFA), the company began by manufacturing a 24 horsepower 4 cylinder open air car. Alfa is best known in the U.S. for producing small 2 seat roadsters, the Alfa Spider. The company has not sold new cars in the U.S. market since the mid 1990s. Furthermore, the cars had quality and reliability issues that deterred all but the most ardent of Alfa fans.

It remains to be seen if Alfa’s entry into the U.S. market will achieve a foothold. Presumably, their ambitions won’t be lofty in the beginning, given current market conditions and the history of the brand in the U.S. What they are certain to achieve, is a stunning entrance, worthy of any Hollywood red carpet event. These are certainly cars that must be seen, no description would do them justice. Take a look for yourself.

Monday, March 2, 2009

Why so many brands GM?

Okay, so here's a question for a certain U.S. Automaker: Why do you have to have so many different brands or makes of car--just for the U.S. Market? Chrysler has Jeep, Dodge, and Chrysler (they got rid of Plymouth). Ford has Lincoln, Mercury, and Ford (not bad-but why keep mercury). But General Motors has Buick, Cadillac, Chevrolet, GMC, Pontiac, Saturn, and Hummer. Buick and Cadillac are both luxury brands.

Both have upscale cars, with lots of amenities and lots of price. Is Cadillac a little more upscale than Buick? Historically, that had been the case. Historically, meaning the 1950s! In this economy, who needs two separate luxury brands? How many of these luxury vehicles does GM think they can sell? It borders on lunacy. To make matters worse Cadillac and Buick are trying to compete with each other for the same market. Maybe that is an indicator of why they need so many government loans to stay afloat- they compete with themselves, and both sides are losers...Pick one (Cadillac) and support it exclusively. Buick can disappear into the sunset, or to China (where it's popular.) But I digress; we are discussing the vast U.S. market. Think of all the money GM can save by not having Buick around?

Now just when you thought the problem was solved, GM has yet another luxury brand, Hummer, which sells upscale pseudo-off road vehicles. Hummers compete directly with Cadillac SUVs. Good idea for business? Probably not. As we mentioned previously, competing with ones self isn't a good business strategy, it’s called cannibalization, and it means higher costs and lower sales. Sell Hummer, which luckily is what GM claim they are trying to do. Fingers crossed everybody!

Okay, lets step into the middle market-the car for us “Average Joes.” GM offers four different brands for us to chose from. Chevrolet, Pontiac, Saturn and GMC. Someone please explain to me, the difference between Chevrolet and Pontiac. They target the same market from economy cars to middle of the road cars. Again they compete against each other. And they cost more money to keep around.

Why can't we just call the best cars from each: Chevrolet? Sounds simple to me? Pontiac only sells a few models and no SUVs. Chevrolet offers a full line of cars, trucks, SUVs and minivans. Sounds like enough choices to me. Pontiac should just disappear off into the sunset...bye bye.

Now the easiest one, GMC. GMC makes the EXACT same trucks that Chevrolet does, just with a few minor cosmetic changes. They are like identical twins wearing different clothes. GM does not need two of them. GM certainly doesn't need any more cannibalization.

If consumers want to buy a GMC truck, they will want to buy a Chevrolet truck, because they are, essentially, the same truck! Duh! Let me repeat for emphasis, Duh!

We now turn to the hard choice, Saturn. Saturn does compete with Chevrolet and Pontiac for the small to middle market, so there is some cannibalization. But Saturn could be shaped into a low cost, youthful brand for GM, like Toyota's Scion brand. Keeping Saturn around is only worthwhile, if the development of a youthful brand is desirable, otherwise it’s a waste of resources, just like Pontiac, or Buick, or GMC. Instead of buying a Saturn, just buy a comparable Chevrolet. Oh did I mention the cars might be even cheaper without all that extra corporate overhead.

So what is the downside to all of this? Well, most likely its job losses, which is unfortunate and should not be taken lightly. Those employed by Buick, GMC, Pontiac, and Saturn would possibly lose their jobs, although many employees would still be needed to help the remaining brands handle the increased sales shifting over from the closed brands.

It is also abundantly clear that due to slower sales in this tough economy, some job cuts at GM, are inevitable, whether we shut down brands or not. If we use the brand shut down to target the job cuts, we end up with a more efficient company with employees in the right places to grow the company.

Random company-wide job cuts will only hurt morale across the company, and do nothing for efficiency or production costs but save some short term money. No underlying company problems would be addressed with random cuts. Strategic targeted cuts are most likely to result in a healthier, and more competitive GM; a GM that will need to hire more workers once growth returns to the marketplace. This would ultimately yield the more jobs in the company than the alternative.

The other question is that of dealerships. Eliminating 4 brands would certainly cause great dislocation in the distribution channel. But if the overall number of cars that GM sells remains the same, some of the Pontiac, Buick, GMC, and Saturn dealers will still be needed to sell and service Cadillac and Chevrolet. If given the choice to continue dwindling sales, or to change brands with an investment in the dealership, the smart and profitable dealers will chose to invest. The weaker dealerships will close, or shift to another carmaker. Even losing a few dealerships is acceptable in view of the ultimate lean mean GM turnaround.

If you disagree or think I am wrong, just look at other successful car companies in the U.S. For example: Toyota, Scion, and Lexus; Honda and Acura; Nissan and Infinity; Volkswagen and Audi; BMW and Mini. Chrysler, Dodge and Jeep; Ford, Mercury and Lincoln; Mercedes; Porsche; Hyundai; Mitsubishi; and Mazda. Looks like that might just be everyone else, I wonder if that means something...hmm. Come on GM, clean up your act for real this time! where the Buick brand is quite popular. market, they all have one or two brands or at most three brands.