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Entries in GM (65)

Thursday
Jul172014

Dealers Suing GM Canada

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.

 

 

Friday
Jul042014

Vroom Room

Good Morning!

Its Friday, its the Vroom Room, come in make yourself comfortable, enjoy the cappuccino and biscotti, join the conversation, leave a comment.

Did you miss that GM dealers in the GTA are suing GM for the lack of sales and financial support. We have been wondering about GM's sale strategy in Canada for sometime, while going from 1st to last among the Detroit 3. We will never know the outcome of this lawsuit, although its clear that there is a communication breakdown between GM and some of its most influential long standing dealers.

Losing Pontiac in Canada was a major blow, GM Canada never grasped the gravity of losing Pontiac. With many Pontiac dealers becoming Korean dealers overnight aiding the Koreans to instantly increase their sales.

Think of Cadillac for a moment, superb world class product languishing in the market. Agreed we could keep on going ...

If you get the impression that recalls have little to even no influence on vehicle sales. Just look at GM with massive recalls while sales just keep on in the US, and submerge in Canada.

You should not be surprised that Mark Fields replaced Alan Mulally, its an orderly progression at Ford. Yes you will read a bunch of glowing reports about Mark Fields in the coming weeks and months.  

Canadian Sales:

June was another record month, with a record first half of 2014, while GM bites the dust with the Koreans breathing down its neck. A few years ago anyone telling you that the Korean would be trading paint with GM, it would have been laughable.

Pontiac dealers becoming Korean dealers...heresy, now its reality. 

Similar to real estate "Money for the Deal" powers sales and leases in Canada.

Impressive photo gallery from Goodwood...of older and newer race cars.

 

 

Friday
Jun132014

Vroom Room

Good Morning,

Love is what drives us. Everything else is secondary.Its Friday, its moving day for us, its the Vroom Room, and its the 13th, come in make yourself comfortable, join the conversation.

Agreed...Port Dover is a busy place today.

In case you missed the entire report on the GM ignition switch, scroll down. Its back to doing the right thing which at times seems impossible to do. From the Al Pacino speech in Scent of a Woman "That's called courage. Now that's the stuff leaders should be made of. Now I have come to the crossroads in my life. I always knew what the right path was. Without exception, I knew. But I never took it. You know why? It was too damn hard.

Would it be fair to conclude: the low interest rates that are fueling the real estate market, are also fueling the auto market in Canada by providng easy and ongoing incentives for the deal. What do you think?

Le Mans is tomorrow...

There is a majority Liberal government in Ontario.

Our usual old race cars from the SVRA Brickyard Invitational...enjoy.

 

 

Saturday
Jun072014

GM Ignition Switch 

The full report of the ignition switch investigation by outside counsel, yes we urge you to arrive at your own conclusions.

 

 

 

 

 

 

Friday
May232014

Vroom Room

Good Morning!

Another Friday, its the Vroom Room come in make yourself comfortable, enjoy the cappucciono and biscotti, join the conversation, leave a comment.

Have you noticed the incessant parade of recalls from GM? You have to wonder what the management team of the time was thinking about, where their heads were at...if all the comments of this good guy, and this other good guy were all applicable when several got their walking papers. 

A classic case of when it rains it pours, and how much information got stuck in a silo not communicating with the other silo. While the Gulfstreams kept flying.

It also begs the question...What happened to doing the right thing?

Have you noticed the on and off discussions on speed limits especially from pundits that have recently experienced a drive on a German Autobahn. We all know that the speed on Autobahns are not "wise open" there are numerous areas with speed limits, while the wide open areas are usually in stretches without on/off ramps.

If you have experienced the German Autobahns you surely remember that when you are running wide open at over 200 KPH fuel economy is in race car territory. Yes...the gas gauge drops accordingly and very quickly. 

As you know when you are running in the 200 KPH range, you need a good car, high speed tires (that wear quickly), serious brakes, serious suspensions, and drivers that have a profound understanding of those speeds...is it starting to sound like its costs money?

Provinces in Canada have the posted speed limit, usually 100 KPH, and the tolerated speed limit, before you get busted. In many provines the tolerated speed limit is a shade below 120 KPH, the reason you see most folks in the 117-118 KPH range. In Ontario the tolerated limit is a shade above 120.

Obvious when it gets dark speeds have a tendency of increasing, and hopefully you do not have the new fangled headlamps that are a light show, and attract attention.

German cars with V8's that can blast down an Autobahn, tend to have a "fuel economy" sweet spot which is often higher than even the tolerated speed limit. You have to back down 100 or 200 RPM's and lose a few tenths of a liter of fuel economy.

As you know 4 cylinder cars do not frequent the left lane of Autobahns, you still need horsepower to travel at elevated speeds and overcome wind resistance.

Impressive photo gallery from the Mille Miglia 2014