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Death Watch 103 Deja Vu
Robert Farago
Friday, December 15, 2006
www.thetruthaboutcars.com
About two years ago, GM CEO Rick Wagoner made a critical decision about his company's products. Rather than fully revamp The General's full-sized SUV's or divert serious time, energy and money into small car development, Rabid Rick decreed that GM should rush through a "refresh" of their current Tahoe, Yukon, Suburban and Escalade.At the precise moment that these new[ish] four-speed gas guzzlers arrived, safety, environmental and fuel prices whacked the genre. Strangely, both pundits and PR flacks were nonplussed. These things are good. They'll sell. How wrong can you be? Oh, I'm sorry. Didn't you hear? The GMT900's are a flop.
Perhaps you remember the hoopla surrounding the GMT900's. I do. And I remember the scorn, derision and invective aimed at this website when we declared GM's new(ish) SUV's a mediocre landing at the wrong airport. Well read 'em and weep. The Chevrolet Tahoe currently lingers on dealer lots for 77 days. Some 600k full-size GMT900 SUV's are out there, somewhere, waiting for customers willing to pay $5k or more below list. Many of these are '06 models. Hence GM's decision to halt GMT900 production in January for two weeks. After that they'll reduce throughput by over ten percent.
When the GMT900's debuted, GM Car Czar Bob Lutz confidently predicted that his employer's new(ish) behemoths would do just fine; they'd capture an equally profitable slice of the diminishing pie. They didn't; the genre is down by well over 20% in annual sales AND GM's surrendered SUV market share to Toyota. And now Maximum Bob has become maxim Bob: the poster child for that old saw about repeating your mistakes 'cause you were busy dreaming of flying combat jets against the Ruskies when you should have been paying attention in history class.
This time out, Maximum Bob's telling the world that the automaker's GMT900-based pickup trucks upon which his boss said "The General's recovery depends" will rack up over a million sales this year, and more next. Yes, the same man who tut-tutted the demise of the full-size SUV two days before Hurricane Katrina decimated the Gulf region's gasoline production predicts that "pickups will pick up" a few hours before the Fed warned that the U.S. housing market faces a "substantial" cold spell. A significant housing slowdown is the pickup truck equivalent of a category five hurricane. And The Vice Chairman of Global Product Development still can't see it coming.
Now don't get to thinking Maximum Bob is spinning a tale to bolster his beleaguered troops/GMs stock price. This man is deluded past the point of crazy-like-a-fox credibility. To wit: when pressed on the impact of the deep discounts offered on pickups produced by The Blue Oval and the Dodge Boys on GM's full-sized pickups, Maximum Bob admitted that "This level of discounting on the pickups is uncharted territory& But the good news is that incentives of $7,000 to $8,000 a vehicle is not sustainable.
Huh? Is Maxi Bob saying his competitors are about to go under? Or that they'll come to their senses, stop discounting and use their unsold vehicles for artificial reefs? OK, so what about next year's debut of the new Toyota Tundra? Surely, that's going to put the hurt on GM's pickup truck margins. "The Tundra will take share, but (it) will steal from the older Tundra and from the Tacoma," Lutz said. "I don't think we'll see that much switching from American truck owners to the Tundra." Now that's what I call confidence! Or, more accurately, complacency!
Mark my words; it's only a matter of time before GM's GMT900-based pickups join their GMT-900-based SUV's in automotive purgatory, with plenty cash money sitting on their hoods. Even if the Silverado and Sierra somehow manage to cling to their current volumes in a collapsing market, the General's margins are about to get hammered. Neither Ford nor Dodge can afford to surrender market share; they'll do (are doing) whatever it takes to keep the pickup pipeline flowing. And Toyota didn't build that truck plant down in Texas just for show. If they have to slice prices to move the metal, they can surely afford to do so. And by God they will.
This, folks, is Rick's bad. Instead of holding off and building game changers - vehicles that can recover lost ground with undeniable, unassailable superiority, GM's CEO thought it best to get the new shit out the door as fast as possible, regardless of its ability to wow the non-faithful. One wonders what would have happened if Rabid Rick Wagoner had sat down with his execs and said "Build me a truck that gets 25mpg in the city, feels like an Audi inside, tows more than anyone else and outlasts plutonium. I don't care if you have to stick a hybrid synergy drive under the hood. I don't care if we make a plug nickel. Just do it."
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