So those GM cuts, eh?

"CB" (jrcb) 11/26/2018 at 21:36 • Filed to: Maybe chasing profit isn't a good idea

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I’m still thinking that the cutting of sedans by major manufacturers is going to bite them in the arse some day, because they keep crying “poor millenials won’t buy our vehicles!” when all the cheaper ones are getting axed in favour of trucks that are impossible for people to afford. I’m wondering if/when the Sonic or Spark will get axed.

I’m also sad about the Impala, because that was a nice ride. I enjoyed it when I rented it.

Maxima Speed > CB 11/26/2018 at 21:48

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Hot take incoming!!!!!!

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The world would be a better place if GM didn’t exist.

Bman76 (hates WS6 hoods, is on his phone and has 4 burners now) > CB 11/26/2018 at 21:48

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The CT6 and Volt are the only real losses here.

Quadradeuce > CB 11/26/2018 at 21:53

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Also, if gas ever gets back up to $4/gallon...like say if Russia gets heavily sanctioned over invading Ukraine or something.

Supreme Chancellor and Glorious Leader SaveTheIntegras > Maxima Speed 11/26/2018 at 21:56

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We could afford to lose chrysler and some GM brands for sure...

wafflesnfalafel > CB 11/26/2018 at 21:57

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R emember, multiply by a factor of about 8 when calculating job losses. All these higher end jobs support many others. We are now officially on the slide down the back side.  Save your pocket change folks.  

Tristan > CB 11/26/2018 at 21:57

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Chasing profit is a terrible idea. They should continue building uncompetitive shitboxes that no one buys, losing money all the while. Eventually the tax payers can pay for all those sedans no one bought at the next bailout!

Maxima Speed > Supreme Chancellor and Glorious Leader SaveTheIntegras 11/26/2018 at 21:58

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Yeah Chrysler was dead to me after they canceled the glorious 200 

Also I did intentionally type 200 not 300 

Bman76 (hates WS6 hoods, is on his phone and has 4 burners now) > Quadradeuce 11/26/2018 at 21:59

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Or like if we really piss off OPEC by giving a bunch of waivers to companies to buy oil from Iran without any warning...

KingT- 60% of the time, it works every time > CB 11/26/2018 at 22:07

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!!! UNKNOWN CONTENT TYPE !!!

That’s because at least from the POV of GM and Ford’s recent car lineup cutting decisions, the competition has gotten SO MUCH more better and Millennials won’t buy their products in large numbers even if they were cheaper, to justify keeping them around. Let’s take the example of the Cruze. Millennials who can afford $18-25K new or lightly used CPO vehicles would rather buy a CX3, Hr-V, C-HR, Kia Soul etc. The price and mpg penalty (even with the scenario of a big increase in gas prices) is hardly a deal breaker with all the usual crossover “advantages” including AWD in some of these models. And, if they still wanted an exact equivalent car- The Civic, Mazda 3, Golf, New Corolla hatch, Elantra, new Forte etc. are all much better.

Let’s face it, GM is much better at making big crossovers, trucks and sporty cars more than economy and midsize cars- I mean who even buys a Malibu or Impala outside of old people in the midwest and rental fleets? Who will care about the Passat/Subaru Legacy/Buick Regal being discontinued tomorrow when the 2017 year end numbers look like this for the midsize segment?

In a declining segment in a highly competitive market, if your product is not one of the best or profitable enough, there’s no business case keeping it. We can cry hoarse about this but it won’t matter. Nobody cares about or even buys the CT6, XTS or LaCrosse in the first place (I like the CT6 and with the 3.0TT seems to be an excellent car, at least they are going ahead with the CT6V though). They could use the Volt powertrain and make a crossover which would sell better and for higher profit. The Blazer is going to replace a lot of midsize GM car sales. They have their reasons.

KingT- 60% of the time, it works every time > Maxima Speed 11/26/2018 at 22:15

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It’s not GM but Nissan for me. They can cease to exist tomorrow and nothing of value will be lost. 

Future Heap Owner > CB 11/26/2018 at 22:19

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Eh, they’ll probably be fine as long as they get battery electric vehicles out the door at competitive prices before gas rises significantly and before most of the competition does too.

Future Heap Owner > Future Heap Owner 11/26/2018 at 22:20

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Which is a lot of ‘if’s now that I look at it

nermal > CB 11/26/2018 at 22:25

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GM is just following the path set first by FCA and 2nd by Ford. They are betting that two things will happen -

1) New vehicle demand will drop (due to rising interest rates, goddam millennials ride sharing scooters, global thermonuclear war, or some other factor s).

2) Fuel prices will remain low (so people that do buy new vehicles buy  trucks & SUVs).

So, if you need to make some cuts, make them in cars that are less profitable and getting old anyways. Again, it’s the same thing FCA and Ford are doing. 

Chariotoflove > CB 11/26/2018 at 22:34

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How many of these cars are actually not profitable vs not profitable enough to make the company happy?  When I look at investment strategies, I know that neither stocks nor bonds will always both be the highest earning part of my portfolio at any given time, but it’s important to keep diversified because things change. I have to think car product portfolios are similar. 

CB > Chariotoflove 11/26/2018 at 22:36

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Diversification is for chumps. Investing solely in gas-guzzling SUVs has never not worked.

Highlander-Datsuns are Forever > wafflesnfalafel 11/26/2018 at 22:37

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I don’t want to be a pessimist but you are right.

Maxima Speed > KingT- 60% of the time, it works every time 11/26/2018 at 22:44

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Why not both?

gmporschenut also a fan of hondas > Quadradeuce 11/26/2018 at 22:54

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I imagine the US would be slightly more insulated than 40 years ago, but knock one or two producers by a few mines in the straight of Hormuz or Malacca and watch the markets go crazy.

Its one of the reasons I bought a volt. We’ve had a good ride of cheap gas. 

KingT- 60% of the time, it works every time > Maxima Speed 11/26/2018 at 22:59

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Because:

1. Corvette

2. Camaro ZL1

3. GMC trucks which are actually pretty good.

Spamfeller Loves Nazi Clicks > Chariotoflove 11/27/2018 at 00:07

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Regal: prints money (in China)
LaCrosse: prints money (in China)
Impala: prints money (in fleet use)

They’re killing stuff that the R&D costs have already been amortized and recouped on for a long  time. So the tail end here is high margin compared to new design.

BaconSandwich is tasty. > KingT- 60% of the time, it works every time 11/27/2018 at 00:21

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...but will they actually put the Voltec drive train in something else?

boxrocket > CB 11/27/2018 at 01:49

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I’m hoping the companies learned their respective lessons from a decade ago. If - for example - while they cancel small car lines in the US bur keep making and evolving them elsewhere, they would still make them NHTSA-compliant (or nearly so, if it’s just changing little things like tail lights or whatever), so they could quickly respond to a shift in market demand because the small models still exist and are compliant, just not made here. That way unlike having to wait multiple years to being small cars like the Fiesta, Focus, Spark, Sonic, etc., they could have them begin being shipped here with minor retooling before having to convert local factories to match the demand change.

SilentButNotReallyDeadly...killed by G/O Media > CB 11/27/2018 at 05:08

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Here’s a hint to GM and Ford : specialise...and die.

Everyone abandoned the city car segment in Oz. Kia came in with the Picanto and t oughed it out for a couple of years. They now sell 15,000 of them a month, have 80% of the segment and sales growth month on month. And so many buyers under 25...

bhtooefr > boxrocket 11/27/2018 at 06:50

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They also need to remember to make them good .

Cynical “let’s slap an American badge on a shitbox primarily meant for developing nations and produced by developing auto industries ” cars  won’t sell except to the desperate, and the desperate have used cars to choose from too.

boxrocket > bhtooefr 11/27/2018 at 06:56

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Right, which is why it’s frustrating yet reassuring that - while the new Focus and Fiesta are getting positive reviews as they have for the last few generations - we’re nor getting them here. Kia/Hyundai still seem to care about small cars, though Hyundai has mostly lost the stylistic charm they had for most of the last decade or so. The new Corolla is actually more than competitive. The new civic - while not possessing a flattering figure - is mostly good, despite the CVT. The new Mazda3 is being unveiled today, and Mazda’s put a fair amount of marketing into the reveal.

If Eurasia is where small cars go to get good, then come to North America, I think we’ll be fine for if/when they’re more desirable here. 

bhtooefr > boxrocket 11/27/2018 at 07:39

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To be entirely fair, there’s a trend in the US market to decontent the US versions of those cars, too - the Focus in the US for instance gets hard-touch plastics instead of soft-touch to make it cheaper, as an example.

Manny05x > KingT- 60% of the time, it works every time 11/27/2018 at 07:49

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I feel the same about Nissan.

KingT- 60% of the time, it works every time > BaconSandwich is tasty. 11/27/2018 at 10:18

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It would be smart for them to do both Volt and Bolt- based crossovers which are both good platforms, because Kia/Hyundai is sure as hell going to lead the affordable Plug-in/EV segment with their current and upcoming Ko na EV /Niro Plug- in and EVs /Soul EV s.

I mean, GM doesn’t even have a hybrid Equinox or similar to compete against the Rav4Hybrid(Which Toyota expects to be 24% of sales) and the CR-V Hybrids.

Chariotoflove > Spamfeller Loves Nazi Clicks 11/27/2018 at 10:55

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My understanding is that they kept the lady gen Impala for fleet, the design for which was paid long ago,  and the new one was for private sale. Not saying the new car didn’t see rental lots, just that Chevy didn’t want it to be a rental special. 

Spamfeller Loves Nazi Clicks > Chariotoflove 11/27/2018 at 12:23

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You are correct there; GM very much disliked the fleet market only because of the perception it creates that it’s a cheap, piece of crap. That said, the new gen Impala is actually in the exact same boat. The R&D was paid for 10 years ago, since it’s an Epsilon II (LaCrosse/XTS/Saab 9-5.)

Epsilon II was intro’d in 2002 , the current gen Impala in 2014 . The 2005-2013 Impalas are W-bodies. So, yeah, that perception is not entirely wrong.

Chariotoflove > Spamfeller Loves Nazi Clicks 11/27/2018 at 13:35

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I thought at the time that the Impala was a great way for Chevy to leverage the Epsilon II platform into a modern reincarnation of the “ working man’s upscale” vibe that the name plate  once signified long ago. And the reviews all seemed to indicate they succeeded.  I sat in one and really liked it.  I’m sad to see it go.