WSJ Readers Beating up on GM
Dream Cars: Made-to-Order Line Could Restore Pride in American Autos – WSJ.com
The WSJ published a group of letters critical of GM in response to the article about the head of AutoNation calling on the automakers to “think different” (to borrow a phrase from Apple), including:
You indicate that General Motors has more than one million unsold cars in the pipeline, in contrast to 320,282 cars for Toyota Motor Co. “It's not like we have some crisis,” you quote Mark LaNeve, GM's head of North American sales and marketing, as saying. If G. Richard Wagoner, chairman and CEO of GM, believes this isn't a crisis, both he and Mr. LaNeve should be fired.
John W. Behrens
Tucson, Ariz.
As the NY Times article from yesterday's Sunday Magazine confirmed, GM has about 3x the dealer inventory as compared to Toyota (as John said above).
The other letters show at least a few data points of the American public losing patience with GM's management-driven struggles.
Huge opportunity for GM! If they can cut the pipeline in half, by 500,000 cars, and each car represents $10,000 of invested cost, that would free up $5 Billion in cash. Even at GM that’s got to be Real Money.
If GM is like most manufacturers struggling to get out of the red, that outstanding inventory has been financed at a price very close to what the car will eventually be sold. I would guess GM’s internal measurement (ROI) system treats this inventory like sold goods.
It becomes a perverse incentive as the motivation to move the cars out of the lot is not the ‘value add’ margin, but the financing cost. Actually, if memory serves me right, it is typically the dealers which are saddled with this financing cost as well.
It becomes easier to understand why management views the only way out of their hole is to sell more cars (rather than become more lean).