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Originally Posted by espo89
If I'm not mistaken are not most of the Honda's (and some of the Acura's) sold in the US actually built in the US? I know Honda has a hugh plant in Ohio that builds Accords and Civics as well as a number of SUVs. So you can build an affordable dependable car in the US.
GM's (as well as the rest of the big US car companies problems) are a result of decisions made long ago when Imports didn't really exist in this country. The labor agreements and management decisions have left the companies with a large fixed cost structure. For the companies to produce a car with the same consumer price point as an import, they need to spend LESS on the car itself and MORE to pay for the fixed labor expense. Therefore, they tend to have to use cheaper (read less reliable) parts and designs then the imports. In that case, no matter how good the assembly is, the car is still crap.
People then say "Why buy a GM car when I can get this import for the same price and it's reliable!" GM sells less units and then the fixed costs become a greater percentage of any one car, they have to then spend LESS to make the same car. The car is even more unreliable, and then they lose more business.... It's a classic downward spirul in manufacturing business when a new company enters the market (foreign car companies) without the same fixed cost burden.
Unfornutately there is no way GM (or Ford and Chevy) can really survive in this market in their current forms. They will need to do something drastic sometime in the near future. GM is the first, but will not be the last major US car company in deep trouble.
Just my 2 cents...
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I agree with most of your analysis, about fixed cost pricing due to high priced labor contracts. But, let me finish the other half of your analysis, which is that GM has to do something drastic. That other half is that GM does not have the vehicles that command good prices. While GM already lost over 50% of it share in car sales, they still hold major share in big trunks and SUVs. They should be on the defense that high gas prices can easily shrink that sales, and thereby be the last downfall of their domain. They should capitalized on that sales, and funnel some of its profit earnings to reinvent their car or maybe hybird product lines, while they still can. qoute:
They have the ability to do it, for there are pockets of vitality within GM. The Cadillac division redesigned its lines and achieved big sales gains. GM is the market leader in China (indeed, in 2005 its total foreign sales will surpass U.S. sales for the first time).
But, those success could be fatal, and may even dull "the urge for competitive survival," which is "the strongest of all economic incentives." Companies might fail "to recognize advancing technology or altered consumer needs."
Avoiding these traps is GM's challenge. With even talks that GM could go bankrupt, although that isn't inevitable, even the talk measures how poorly GM met the challenge.
unquote.