GM lost $1,227 per vehicle through June

[Niko_Fx]

GM lost $1,227 per vehicle through June, Harbour says
Reuters / August 29, 2005

DETROIT General Motors lost an average of $1,227 per vehicle in the first half of this year in North America, while cross-town rival Ford Motor Co. lost $139, according to new research from Harbour Consulting.

"GM has two to three people sitting at home for every single person working today, and that has a huge legacy cost impact on them," Laurie Felax, vice president of Harbour Consulting, told an automotive conference on Monday. "It wipes away any profit that they have."

Both GM and Ford are struggling with multibillion-dollar "legacy costs," including generous retiree health care and pension benefits awarded under their restrictive contracts with the United Auto Workers union.

In June, GM also launched its big employee pricing discount program in which any consumer pays the same lower price a GM employee would pay for new cars and trucks. The discounts resulted in blockbuster sales for GM, but some Wall Street analysts said the incentives, which continue through September, are squeezing already low or nonexistent profit margins.

The employee pricing program was matched by Ford and DaimlerChrysler's Chrysler arm in July.

Through the first six months of this year, Chrysler was the only Detroit automaker to make a profit per vehicle, Felax said. It averaged a meager $186 per vehicle, she said.

In sharp contrast, the big three Japanese automakers -- Toyota Motor Corp., Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. -- all earned well over $1,000 per vehicle in North America.

Nissan earned an average of $1,826, Toyota $1,488 and Honda $1,203 per vehicle in the first half of their fiscal 2005, Felax said.

Japanese automakers, relentlessly gaining U.S. market share, have very high profits per vehicle because they have more efficient manufacturing operations and lower legacy costs, Felax said.

The relatively new plants of Japanese automakers in North America have younger workers and a mostly non-unionized work force.

Toyota, Nissan and Honda are also stepping up production capacity in North America, particularly for high-margin pickups, Felax said.

"The (profit numbers) are going to continue to grow as that mix of trucks grow for the Big Three Japanese companies," Felax said.

http://www.autonews.com/defaultRegis...s?newsId=13185

[spi-ti-tout]

Does anything say anything about Mitsubishi?

[Sweeney921]

hahahah I love how GM screwed itself with an already desperate marketing scheme.

[sutton4481]

Ironic how the unions which fought so hard for these retirement benefits for their former workers are now costing the company so much it has to keep its current workers at home.

[piston_burner]

The worst part about what we are seeing with GM and Ford is these issues were noted back the 1980s. Both GM and Ford managers made some efforts to address the issues, but the desire to keep the short term outlook good, they did invest enough into the future good of the companies and make the hard choices about cutbacks and pay until after the problem had become huge.

According to one book I read, GM managers in the 1980s spent hundreds of millions on robotics that ended up causing them more issues then helping. Roger Smith blew large amounts of cash that GM had on failed programs to help GM. Smith believe the Japanese were using secret high tech tools to make cars better and cheaper then GM. They did not want to except the idea that GM management style was outdated and costly.

I live near the NUMMI factory. That is the "joint venture" with GM and Toyota. It is an old GM factory that had been shut down by GM in the 1970s in Fremont, California. GM gave the factory to Toyota to run and they could build cars for both Toyota and GM. The stories I read of GM managers coming in from Detroit to work at the factory where interesting to read. Managers who had plush offices with remote control doors and three TVs were given a small desk with the rest of the workers. Toyota believes workers and managers are to work like equals. No special manager cafe, manager restrooms, or reserved parking spaces.

After reading about 4 different books on automotive manufacturing, it has become my opinion that Ford and GM managers were slow in changing and greedy. Their mistakes have created long term problems that are killing these companies now.

I think it was great when Toyota, Honda, and Nissan openned factories in the United States. They took the "awful American workers" that GM and Ford said made it nearly impossible to build high quality cars in the United States and they did fine. Most people do not know how many Japanese car are built here in the United States. It was more proof that GM and Ford management styles or systems were a big part of the problem.

GM and Ford had become famous for busting suppliers down trying to get parts made very cheap. It killed off many suppliers. Toyota and Honda would send their own staff to help suppliers to become better. In turn these companies would supply quality parts and a good price. As much as Ford and GM may talk about being team players, it has been Toyota and Honda that shown they are team players.

I can go on and on about the problems at Ford and GM. It breaks my heart to see these companies doing so poorly. I am big believer if free markets and the idea that businesses must change with times. The failure of Ford and GM to make change and the short term planning that pewvious managers of Ford and GM have made life hard for current management. Toyota will become the largest volume builders of cars before 2010. GM and Ford have been making changes, but they are still moving to slowly. I can see the day when Ford or GM gets taken over by another company. Their track record of failures is wearing their companies down.

I believe both Ford Motor and General Motors can make a come back, but right now they still have management issues hurting their efforts.

[clutch-monkey]

if they die i hope they don't take holden and ford australia with them

edit: i notice you used a less provocative title here niko

[Prius]

BAAAA hahahahahahahahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahhahahaha

[fpv_gtho]

Those profits for the 3 Japanese makers dont really seem like much for some reason...But if GM are losing similar amounts of money, given the economy it cant be good.

[piston_burner]

Those profits for the 3 Japanese makers dont really seem like much for some reason...But if GM are losing similar amounts of money, given the economy it cant be good.

The auto industry as a whole as been getting thinner profit margins, but when you consider how many cars Honda and Toyota sells in North American alone, they are pulling in a ton of cash. Worldwide Toyota alone is making more money then many automakers combined.

It sad to see how the US automakers have lay offs and rebates to try to make profits. Companies like Toyota and Honda have taken a steady flow approach to things and now they are taking control of the world automotive market.

[fpv_gtho]

Its interesting to note that last year, Toyota locally only made about $AUD70 million profit whilst Ford made about $AUD 150 million and Holden had over $AUD200 million

[Niko_Fx]

if they die i hope they don't take holden and ford australia with them

edit: i notice you used a less provocative title here niko

I did... Another forum had the same thread with the same title and some idiots were saying "We can still nuke that pony island" etc... Which is utterly ridiculous and childish and didn't want the same thing to happen on UCP. The title applies to the info in the article only, but some ppl have a hard time acknowledging that.

[piston_burner]

Its interesting to note that last year, Toyota locally only made about $AUD70 million profit whilst Ford made about $AUD 150 million and Holden had over $AUD200 million

Toyota is a company that takes it time growing. In North America they came to this market in 1958. Their current strong position in the US Market took them a while to secure, but delivering quality year after year has given them the best reputation any automaker could want. I know people who bought nothing but Toyotas for the last 30 years and they have yet to have a lemon. Most Ford and GM owners, including myself at one time, got at least one lemon. I now drive a 2005 Honda Civic LX. Ford and GM did not offer a good enough car for the price range I was looking at. I paid more for the Honda by $1500 over what I could have gotten from Ford or GM, but the quality gap seemed big enough to make paying more seem worth it. That is the kind of reputation car makers want.


Ford and GM are a long ways from being down for good, but like I said they have been playing catch up for over 20 years and they just have not caught up yet. Their management style is still to short term oriented.

[Esperante]

BAAAA hahahahahahahahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahhahahaha

STFU.
Toyota loses $3,000 on every Prius.

[kennyknoxville]

^lol...

[Prius]

Toyota loses $3,000 on every Prius.

Toyota sells other cars too, and they are moving off the lots faster than GM's cars.