Tuesday, April 04, 2006
GM Rant of the Day
In honor of, you know, bombed sales in February and selling off a major profit center because it's too expensive to operate with the lousy credit ratings (latter a/k/a cutting off your nose to spite your face):
GM's turning the corner. Or, actually, is possibly on the cusp of turning the corner.
But the situation is worse than it appears.
Let's do the math:
GM (like many manufacturers) reduces its costs by outsourcing, as it were, to suppliers who would provide stuff at a lost (Delphi). And GM is still nonetheless losing money. Delphi is losing money, playing the auto companies' game of squeeze the supplier: We'll sell at a loss now and maybe someday we'll somehow make money.
No, the supplier will just be bled to death.
But the point is, when you read of a manufacturer's sales at a loss, it excludes either the reduced cost by using a supplier or the supplier's loss.
In other words, GM doesn't lose $X. It loses $X+Y.
And can we declare the Lutz initiative dead yet? A rejuvinated Cadillac and a niche vehicle (hte Solstice) are not the foundation for fiscal health. Sexy products are. And by and by, GM is still not there after all these years.
GM's turning the corner. Or, actually, is possibly on the cusp of turning the corner.
But the situation is worse than it appears.
Let's do the math:
GM (like many manufacturers) reduces its costs by outsourcing, as it were, to suppliers who would provide stuff at a lost (Delphi). And GM is still nonetheless losing money. Delphi is losing money, playing the auto companies' game of squeeze the supplier: We'll sell at a loss now and maybe someday we'll somehow make money.
No, the supplier will just be bled to death.
But the point is, when you read of a manufacturer's sales at a loss, it excludes either the reduced cost by using a supplier or the supplier's loss.
In other words, GM doesn't lose $X. It loses $X+Y.
And can we declare the Lutz initiative dead yet? A rejuvinated Cadillac and a niche vehicle (hte Solstice) are not the foundation for fiscal health. Sexy products are. And by and by, GM is still not there after all these years.
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