GM’s New Chairman: “I Don’t Know Anything About Cars”
June 10th, 2009That’s ok, because when the spooks say to jump he asks, “How high?”
Via: Bloomberg:
Edward E. Whitacre Jr. built AT&T Inc. into the biggest U.S. provider of telephone service over a 43-year-career. By his own admission, he becomes chairman of General Motors Corp. knowing nothing about the auto industry.
The 6-foot-4-inch Texan nicknamed “Big Ed” said steering the nation’s largest automaker after bankruptcy is “a public service.” People who know him say he can meet GM’s need for the type of transformation he orchestrated at Dallas-based AT&T.
“I don’t know anything about cars,” Whitacre, 67, said yesterday in an interview after his appointment. “A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same.”
He’s actually right. You make a product at a cost, and sell it at an increased cost to turn a profit. Pretty simple.
All the automotive companies need to clean up their internal expenses. With the cost of production, all of the auto manufacturers have looked more like the government rather than a business. Why does a part cost 3x to 10x as much from the dealer than it does from a third party? Because there are some serious errors in the way they do business. Some of the problem is at the manufacturing level. Some is through the supply chain. How many car dealerships have you seen on acres of prime real estate with outrageously expensive buildings, airing commercials on some of the most expensive spots on radio and television? Because they’re selling $6,000 new cars for $40,000, and everyone in the chain gets richer while the guy buying it gets financed and raped of his hard earned money for years to come.
No business man is going to say “lower our profit margin”. Business is a for profit venture, plain and simple.
With the cost of production, all of the auto manufacturers have looked more like the government rather than a business.
Well, the majority owner of GM is now the U.S. Government. So it more than looks like the government.
I can just see them now. Bids on parts only go to GAO authorized vendors, and the prices will skyrocket. Hell, a factory replacement radio for my 2000 car was already $800. I can’t find it in the current parts catalog (GM part #09370202), but a couple other places had it marked at $400. I could get a very nice aftermarket stereo for the same price. At the time, I was trying to make another car completely original to sell.
A lady changed lanes into me a few months ago, and it turns out my factory wheels are $1000/ea. She hit one front wheel, and pushed my car into the median, bending both wheels. I wanted to keep it original, but told them I’d be more than happy to take a $2000 check, and buy some aftermarket wheels of my choice. 🙂 Since the shop had already done the body work (her insurance paid), they didn’t want to let me have the check too. $1000 is way too much. For that, I could have bought 4 new wheels and tires, and still had two good ones to sell on eBay. 🙂
Not to sound anti-American or anything, but I really hope they help turn GM into the 1930’s origin of Volkswagen. Domestic production of affordable cars for the people. Most people can’t afford to buy a new car. They finance themselves into the giant hole we’re in now to afford a car, when companies should have a good, safe, economical choice in cars. A kid working at McD should be able to save up for a few months, and have reliable transportation.
I have yet to buy a “new” car. Every vehicle I’ve owned has been purchased used. With my current employment state (recently laid off), if/when I need a new car, I’ll have to buy something old and used, and probably fix it up. I was actually very hopeful that my financial state would get better, and I could build my own solar/electric/plug-in car, based on a light sand rail chassis. Being that I drove 15 miles to work and back daily, and both home and work had good sunlight, and I live in the southern US, there was no reason I couldn’t let the car suck up sunlight while parked.
What’s better, to have a 1300 pound car that’s a driving tube steel roll cage, or the 3000 pound stamped sheet metal boxes that collapse under not too much stress.
When I was a kid, I used to race. My mechanic drove a “late model” race car (extremely similar to NASCAR). In one race, there was an accident, a car was launched, and landed on top of his car. He hit the brakes, and it slid off. The only damage? The sheet metal was torn off the roof. Watch NASCAR crashes on YouTube, and you’ll see the kind of abuse those cars can take, and how the drivers generally walk away from them, and those are at speeds of over 200mph. That would be like two cars doing 100mph head on, and both drivers walking away and laughing about it.
I used to go to “you pull it” junk yards for parts for my car, and saw the kind of damage passenger cars take. Sometimes there was still blood inside, and the roofs or doors were cut off to extract the driver and/or passengers. Those were generally 60mph (or combined 120mph) impacts or less. And no, I always opted to not take parts from those cars.