How GM Got Into This Mess

Illustration for article titled How GM Got Into This Mess
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1st Gear: "Build Them For Less"

Illustration for article titled How GM Got Into This Mess

Probably the most interesting bit of reporting this week on the Cobalt Recall comes from Bloomberg this morning, who tracks down what could easily be the root cause.

I'm going to excerpt a big part of the lede of this story and then encourage you to read the rest, because there's a lot of work in this:

The cars at the center of General Motors Co. (GM)'s February recall were still on the drawing board when a top engineer gathered more than a dozen managers and delivered a fateful message: Build them for less.

At the time, around 2000, GM's profit margins were shrinking as worker- and retiree-benefit costs rose and its U.S. market share leadership was eroding. GM's grand plan to make money on small cars, by developing them jointly with Fiat SpA (F), was crashing.

As it became clear that GM's planned Chevrolet Cobalts and Saturn Ions wouldn't get made on a money-saving global design, Gary Altman, the models' chief engineer, told the group they needed to find other ways to reduce costs, including a suggestion to pull parts from existing models, said a person who was at the meeting in the automaker's suburban Detroit technical center.


Altman's message, while by no means a directive to build unsafe vehicles, reflected the environment at GM: The cars were the product of a culture of cutting costs and squeezing suppliers, as described by five people with knowledge of the automaker's engineering, management and suppliers in the decade preceding its 2009 bankruptcy.


Also, wait until you read about how Fiat is also to blame in a weird way.

2nd Gear: That's An Unlikely Prank

Illustration for article titled How GM Got Into This Mess

GM CEO Mary Barra will be answering questions about the recall before Congress on April 1st which, we're guessing, isn't something she'd have guessed would happen when she started this job.

According to Automotive News, NHTSA has also been invited to talk it over. Here's why:

"Their testimony is critical to understanding what the company and NHTSA knew about the safety problems, when they knew it, and what was done about it," Energy and Commerce Chairman Fred Upton, R-Mich., said Thursday evening in a joint statement with Rep. Tim Murphy, the chairman of the oversight subcommittee that will hold the hearing.


3rd Gear: Where Is GM Getting Loaners?

Illustration for article titled How GM Got Into This Mess

While car dealerships keep a lot of loaner vehicles on hand, this GM recall may force them to look outside their lots for additional cars. Where does those come from?

Karl Henkel tracked down this story and it turns out they get cars where most of us get cars when we need them: Enterprise, Hertz and Avis.


Here's the kicker though:

The goodwill gesture could be a double-whammy for GM: The Detroit automaker could be paying for customers to drive something other than a Buick, Cadillac, Chevrolet or GMC. Fords, Chryslers — even Hyundais — could be part of the loaner fleet.


Just make sure they're all Dodgyler Sebringhundreds and they'll come running back.

4th Gear: And Now For Something Completely Different

Illustration for article titled How GM Got Into This Mess

San Francisco may be the perfect place to own an electric car. Or maybe Los Angeles or Charlottesville. Somewhere with a generally temperate climate because, as the AAA told USA Today, research shows that the average range of a car drops 57% in extreme cold and 33% in extreme heat.

The extreme heat is only 95 degrees Fahrenheit which, for places like Houston, is a large chunk of the time. The extreme cold is just 20 degrees Farhenheit, which large swaths of the company have been considering "warm days" lately.


All of these tests were done using an iMiev, Leaf and Focus EV. Individual results may vary.

5th Gear: RAM Prepares To Crush GM And Ford

I've always liked RAM trucks, but it's been sometimes hard to argue they're the best truck for the best price. The newer trucks have been a vast improvement while still retaining the distinct, attractive look we associate with RAM.


Now they're pushing their advantage at a time when Ford is in the process of rolling out a new truck and GM's two truck products have fizzled.

As The Wall Street Journal reports, it's now a three-way race between Ford, GM, and Chrysler for trucks.

In the past five years, Ram's pickup truck sales have more than doubled and the brand's share of U.S. large truck sales has jumped 2.7 percentage points, according to Autodata Corp. In contrast, GM's share has slipped 3.4 percentage points and Ford's is up 2.9.

Last year, for every one buyer Ram lost to Chevrolet, it took nearly two back, a flip-flop from five years ago, when it was losing more buyers to GM than it gained, according by IHS Automotive, citing new-vehicle registration data.

GM officials say the problem is that they've chosen not to offer bigger discounts to match those offered by Ford and Chrysler.


We'll see how that plays out.

Reverse: Formula One Champ Ayrton Senna Born

Ayrton Senna da Silva, the three-time Formula One (F1) world champion, is born on this day in 1960, in Sao Paulo, Brazil. Senna's celebrated career was cut short in 1994 when he died at the age of 34 following a crash at a Grand Prix race in Italy. At the time of his death, he was considered by many to be the world's best F1 driver.



Neutral: What Would You Ask Barra?

Play Congressman, what would you ask Mary Barra on the stand?

Photo Credit: Getty Images


5th Gear: A three way race between whom? Dodge may be gaining ground with a better product, but it's still WAY off the sales pace of GM and Ford.

2013 Year end sales totals:

Ford F-Series: 763,402

Chevy Silverado/GMC Sierra: 664,803

Ram Ram: 355,673