A compelling Cadillac video...Dare Greatly.
With quotes from "The Man in the Arena"
Is this the "reset" moment for Cadillac?
We sure hope it is...
A compelling Cadillac video...Dare Greatly.
With quotes from "The Man in the Arena"
Is this the "reset" moment for Cadillac?
We sure hope it is...
Its Friday, its the Vroom Room, make yourself comfortable with a cappuccino and biscotti.
Agreed its been chilly this week.
Stuff that caught our attention:
"Pick Up sales have exploded due to cheap gas" - Really?
"The Canadian consumer will save billions at the pumps" - Agreed, although CMS (Citizen Main Street) will pay up all over the place to compensate for the lower dollar.
"GM had a record year in Canada in 2014" - Really, a distant 3rd behind Ford and Chrysler in Canada. Its a record alright.
"Oil might reach $40 a barrel" - Everyone in the oil business will keep on pumping the stuff to uphold cash flow.
"Self Driving, connected cars" - Its inexorably moving in that direction, although with CES this week there is some hyperbole.
"Making a dent, leaving a mark" - This week we were quickly reminded how some folks prefer to leave a mark on the world...and its not love.
As if you needed a reminder, next week is the Detroit Auto Show (NAIS)...the start of the season.
Our usual old race cars from the Old Timer Grand Prix.
Since last week there is a new president at GM Canada.
As you know The Colonel has been associated in one fashion or another with General Motors in Canada for a few decades.
Q: Colonel assume you had an opportunity to have a relaxed lunch with the new president of GM at Fazio's in Oshawa (yes its a far fetched thought)...what would you tell him?
A: Guys its an ambitious thought, although the food is very good at Fazio's. Here goes...
Its shameful for GM to be in 3rd place, do we need to say more...just plain shameful and inexcusable.
Its good, its competent, in some cases brilliant, and others uninspired. Capitalize on the "inspired" models.
Offer comprehensive financial services to facilitate selling the product, being innovative would help to increase sales.
Imagine a "social media" campaign to boycott GM products in Canada if they alter downward the current level of employment in Oshawa.
Q: Simple enough...
A: Simple, but complex, and a real challenge for GM.
Q: Colonel, have you noticed that some of the car lines 50% of the models do well, the other 50% is non performing.
A: Yes...we have driven and reviewed most of them, great product, with poor market alignment.
Q: Poor market alignment, care to explain?
A: There are folks at GM that are paid interesting salaries for doing this...why are we doing this for free?
Q: 'Cause you're a good guy...
A: Lets look at Buick for a moment: Lacrosse is a great car even has the sweep spear, with no identity in the market to attract a younger customer base. Regal another great car without an identity. Verano, proves that Buick has a 30K ceiling in the market. Encore same thing reinforces the 30K ceiling. Enclave, it was inspired from the outset, and now its a mature model in a competitive segment.
Q: Colonel we thought you were going to start with Cadillac.
A: Guys you are sucking me into a lengthy discussion. we have driven most Cadillacs in the past few years, and we are Cadillac fans. They are cool cars, literally world class, in an hyper competitive segment.
Q: Are you saying that its a world class car and GM for one reason or another does not connect all the dots and handicaps the market performance.
There is a serious philosophical pick up battle that is preparing itself.
Perhaps you remember when pick ups were physically much smaller, most had 8 foot boxes, a fender side was a toy truck. They were made out of steel with a wood floor in the box, the rear step bumper was always an option.
The simplicity of a pick up (compared to a car) was a cool factor...
The 1/2 ton pick up was for light work, the 3/4 ton remains the work tool, the 1 ton was a specialized tool. In the day manual transmissions were the choice especially in a 3/4 ton. Back to the simplicity, tradition.
Pick ups have grown dramatically in size through the years.
If there is one segment in North America that has not been "cracked" by imports its pick ups. The Detroit 3 own the segment, the F150 is the best selling vehicle in Canada for longer than many folks are alive. GM upholds the tradition of a GMC and Chevrolet truck. Chrysler in the early 1990's started the "big grille" trend.
With stricter fuel economy ratings on the immediate horizon, the landscape of the battlefield is clearly defined for all the contenders.
Lets focus on 1/2 tons since a 3/4 ton due to its GVW is usually above the fuel economy ratings.
Ram: gets the ball rolling with the Eco Diesel V6 touting compact car fuel economy on a full size pick up. Its a good strategy to have a smaller diesel available to surpass the fuel economy ratings.
GM: the redesigned pick ups, although competent, and full of features, for one reason or another did not capture the imagination. Bold grilles, smoother lines, full complement of luxury features. The other strategy deployed by GM is to revisit/re execute the mid size pick up. Mid size, small diesel engine...
Ford: focuses on weight, if you reduce weight, need a smaller engine, gain in fuel economy. Aluminum is the old school / classic way to reduce weight. Easy...lets do an aluminum pick up.
It will be revealing in the ensuing months to observe which strategy is the best, and most enduring.
The Colonel just joined us for a coffee, and since the latest price revelation on Cadillac we are anxious to have The Colonel share his thoughts. Lets get going.
Q: Colonel, you look prepared and aggressive this morning.
A: Thanks guys, its my usual persona, perhaps a little too aggressive.
Q: Cadillacs were "The Standard of the World" at one time.
A: That was a few generations ago, when I was a kid a Cadillac was the standard of the world.
Q: What happened?
A: I had an epiphany in the mid 1980's when Mercedes-Benz launched the 300E and Cadillac launched the Cimarron. One car became a world class benchmark, the other became the subject of jokes.
Q: Anything else?
A: In the same time frame or a few years earlier, the old folks of that time coming out of the recession of the early 1980's were trading in their Cadillacs in droves for German cars.
Q: At that time not only were they losing existing customers, they did not have a product to attract new customers.
A: Precisely, here was Cadillac pounding itself into the ground.
Q: Today Cadillac has a good product.
A: In 2014 we can say that most Cadillacs are phenomenal cars, they are literally world class.
Q: That good?
A: Absolutely, you don't expect it, but they are that good, if not better.
Q: You are saying that anyone that did not get close to a Cadillac in a while if they would experience an ATS or a CTS would be totally impressed with the cars.
A: Yes, they would even wonder why it took them so long to catch on...that they are good cars.
Q: Such good cars and their sales are sporadic.
A: Isn't that a challenge, good cars and not selling enough of them to secure a position in the segments.
Q: The SRX does reasonably well in Canada?
A: Yes...its getting old since the resouces were placed on the sedans.
Q: What is the problem?
A: Simple, PRICE.
Q: Are you implying that they are too much money?
A: At times its bewildering to watch GM deploy their pricing strategies, and the market conveying a blunt sledgehammer message to GM. Its the same with Cadillac, its a clear message from the market.
Q: How about the Cadillac leadership which has gone through a revolving door of late.
A: That did not help, and this latest leadership is not helping either reinforcing the surrent pricing strategy.
Q: You had misgivings about this latest leadership move.
A: Absolutely, huge doubts, and now its totally scary. Cadillac just told their competition that they are going to sit on the sidelines for the next decade until the market comes to them.
Q: Its the story of superb cars with a flawed selling strategy, and now encouraging its competition.
A: Its scary in its simplicity.
Some issues seem to have a life of their own. The Pontiac saga in Canada continues to endure.
We have always been of the opinion that losing Pontiac deeply affected GM sales in Canada. In addition to greatly assisting Korean manufacturers in quickly establishing additional sales points.
Not only did GM close Pontiac sales points, created internal turmoil; it quickly assisted its Korean competitors.
Some Pontiac dealers in desirable "open points" for the Koreans did well, and very quickly. Other dealers did not do so well. In addition to the various buy and sell side agreements to ideally consolidate the GM dealers into the ideal "full line" representation.
It begs the question "How much sales momentum did GM lose in Canada?"
A few years ago we were reading about various legal positions regarding the closings, and the various players and stakeholders that were involved. Back then it seemd a little complicated, and convoluted.
Yesterday the trial started, this article in the Globe and Mail provides a glimpse of the proceedings, stakeholders, conflicts.
It will be interesting to see how these legal proceedings develop, and who will come out ahead.
A bit of nostalgia this morning. If you have been around this business long enough you remember, and perhaps you even sold GMC trucks with 427's way back in the day.
Here is the deal:
Back in the day a GMC or Chevrolet truck with a 366, 5 speed, 9 front, 18,500 2 speed in the back, 10.00x20 tires and a 27,500 lbs GVW was the standard of the industry. These trucks sold by themselves, they had such a reputation of being the best.
At one point GM truns the 366 to a 427, as an aside this was not the same 427 as in cars, it had a tall deck block, and was used in trucks and marine applications. Although the 366 was bullet proof. The 427's were not lasting as long.
Numerous folks at GM were scratching their heads as to why a 366 would easily last over 200,000 kms in a truck and the 427 was barely lasting 100,000 kms.
Here is another deal:
Been in the business long enough you hopefully remember a company called McCallum that was transporting GM vehicles from the factory or rail heads to GM dealers in eastern Canada. McCallum had a numerous tractors with 427's pulling their trailers. Yes...they did not last very long the 427's.
GM in Canada enlisted McCallum to run various tests on various configurations of 427's. GM will install an engine in a McCallum truck, have the truck cover a speciifc mileage, take the engine out, replace it with another engine. Obvious do a meticulous tear down of the engine taken out of the truck. Yes...the old tachographs were helpful during the tear down.
The conclusion...not enough gas flow, the 427 required appreciably more gas than the 366. The by now iconic single 200 liter step tank with an electric fuel pump for the 366 created instances of fuel starvation with the 427. The solution...dual step tanks with dual fuel pumps.
In Canada, a 427, with a 5 and 4, 12 front, 38,000 in the back, with an Hendrickson suspension was the standard dump truck for countless years.
At the time GM had the medium duty truck market "locked up" with the 366 and 427.
The last deal:
Yes...the 427 were strong performers on the highway, very strong. Fuel economy...don't ask.
Awesome photography of old race cars from the Silverstone Classic.
The other day we were reading that Boomers are presumably rich, and snapping up luxury cars like its going out of style, one of the reasons MerBimAu sells/leases a ton of cars in Canada. You have to wonder how presumably knowledgeable folks arrive at such conclusions?
The succesful Boomers were driving luxury cars decades ago. Successful Boomers from back in the day, as they become "seniors" have other priorities in their lives, have moved on from the luxury car segment, and yes they might still be driving a luxury car.
Boomers that had luxury cars from back in the day, are surely not the one's snapping up "entry level" luxury MerBimAu's...today.
Agreed, Boomers are still hanging on to their toys, be it a car, a motorcycle, or anything else with an engine.
The dude that could not afford a luxury car back in the day. Be assured this same dude was "envious" of the Boomers with the luxury cars. Perhaps this dude today is driving an entry level MerBimAu.
Fascinating to see GM, Mary Barra, Michael Millikin get raked over the coals again, at a Congressional hearing in the US. While "doing the right thing" takes on new perspectives, and nuances. At the same time the benefit of the doubt dissapates.
Our habitual old race cars from "Sommet des Legendes" at Circuit Mont-Tremblant. As an aside its the 50th anniversary of Le Circuit.
You have no doubt heard that several influential GM dealers in the GTA are suing GM Canada for an an appreciable amount of money (400 M). A few weeks ago we mentioned that its was primarily due to a breakdown in communications.
This morning we have The Colonel with us, he is sharing his thoughts.
Lets get going.
Q: Colonel, good morning, you are looking well, even after a few hyper hectic months.
A: Good morning guys, yes gaining momentum again, hopefully by the end of the month I will be ahead of the 8 Ball as the saying goes.
Q: Why would several dealer band together to sue a manufacturer.
A: A communication breakdown, overflowing frustration, rising costs, diminishing sales, diminishing profitability, seeking concessions to name a few.
Q: It seems to be a myriad of reasons, can you simplify the landscape, since you have an extensive knowledge base in this area.
A: Guys at its simplest, a dealership is a money machine, and it has to generate a ton of money to pay all the expenses, remain in business, turn a profit. These dealers are perhaps saying that the GM money machine is broken.
Q: We know that the auto business in general, and at the dealer level requires immense sums of money to function successfully.
A: Precisely...it requires a ton of money, and must make a ton of money to remain viable.
Q: From the little that is known, what do you think are some of the issues that motivated thse dealers?
A: It seems that the "imaged" brick and mortar is one issue. Obvious that when a dealer renovates, or builds new premises, there is immense pressure applied to the money machine.
Q: These guys are smart they knew that from the outset.
A: Sure they did, now factor in diminishing sales for GM in Canada, and perhaps some promises that did not develop, and suddenly its a different landscape.
Q: In Canada during a brutal winter sales increased this year, what does that say about brick and mortar?
A: Great question, impactful, imaged brick and mortar was initiated by the "Germans" a few decades back. Lets be candid, GM dealers went along with acceptable premises (compared to the Germans) for many years. Now factor in the closure of Pontiac dealers, while seeking an improved image for Cadillac.
Q: Pontiac dealers they are long gone by now.
A: Entertain this scenario for a moment: A dealer had both a Chevrolet and Pontiac franchise, the Pontiac franchise closes, GM offers compensation, while demanding renovations and re imaging for the Chevrolet premises.
Q; At a time of "iDealers" the brick and mortar is less of a factor.
A: Precisely, this is reinforced by the brutal winter which did not impact sales, other manufacturers with less imaged dealers are increasing their sales...it gets complex.
Q: Some manufacturers demand exceptional facilities just to open a new point.
A: Yes...some manufacturers demand an up front investment in the millions to grant a point. Although most of these points go to dealer groups, or folks with deep pockets that need to feed their egos. Usually its dealer groups.
Q: Why are dealer groups prepared to spend millions up front, and these dealers are suing GM?
A: A dealer group has a stable of "money machines" from various manufacturers, where one money machine can support an emerging money machine that is just starting out.
Q: Perhaps these dealers suing GM only have a money machine from GM?
A: In 2014 in a major metro market, or better yet the metro market in Canada, having only a GM money machine is a flawed business model.
Q: There is certainly more to this...
A: Sure there is...but in 2014 having all your eggs in the same basket is a precarious position.
Q: What is one aspect of dealer group clout.
A: Brick and mortar...multi franchise dealer groups have no qualms to invest millions in brick and mortar. The dealers suing GM are doing the opposite, they are having second thoughts about their brick and mortar investments.
Q: We could keep on going.
A: Absolutely...at another time.