Carmakers Rev For New Season
Chill, autumn air has blown in, and that means one thing: new cars.
And if you're ogling the '99 models on the showroom floors, the storm clouds gathering over the auto industry may provide you with the best bargains ever.
Here's why. The Big Three have lots at stake this year - especially GM.
Ford has a Ford family member, William Clay Ford Jr., as president for the first time in 18 years.
Chrysler wants to demonstrate the success of its global merger. And General Motors desperately seeks to regain the nearly 10 percent market share it lost during its seven-week summer labor strike and to recover the consequently fumbled launch of its most important new product in a decade: its bestselling full-size pickup.
They are counting on you to walk in with an open wallet. Will you?
Despite record employment, good jobs are hard to find. Several blue-chip companies - Citicorp, Travelers, Motorola, Rockwell, and Boeing - have recently announced layoffs.
Even Federal Reserve Chairman Alan Greenspan last week anticipated "dampened" spending.
That spells big trouble for automakers, especially GM, still struggling to recover from a string of missteps. And what's bad for GM is bad for America. It's the world's largest manufacturer and the third-biggest private employer in the US.
Can it regain its balance? So far, several reorganizations have braked its fall, but none have secured it. The biggest and most recent, rolling the seven divisions into three last month, is still unlikely to be enough.
The fall has been long. In the '50s, six sales divisions took 46 percent of the US market. Now, seven brands capture only 27.5 percent.
So look for big discounts, maybe even free financing soon: GM chairman Jack Smith has put priority on market share - "north of 30 percent" - over profits.
GM hardly needs its 40 US models to reach 30 percent of the market.
GM needs not just a new corporate structure, but a new reality in showrooms: fewer mundane, repetitive models at fewer competing, noisy dealerships.
A bit of history: GM founder Alfred P. Sloane designed the company to have a model for every budget and life stage. As their families and incomes grew, customers graduated from Chevrolets through Pontiacs, Oldsmobiles, and Buicks, finally to Cadillacs.
In the '60s, competing dealers clamored for more models - and GM obliged. If Chevrolet had a sports car, Pontiac wanted one. If Pontiac had a small car, Oldsmobile and Cadillac wanted one.
All those models now cost millions in redundant design and marketing.
GM is starting to move in the right direction by doing some pruning. But it's going to take more than the cancelation of two models (Buick Riviera and Olds Aurora) this month.
This could be a prime example of a company that can shrink its way to success. Before you buy a GM, consider whether the model or even the division has a future. For example, few would lament the demise of Pontiac or GMC. OK, some would. But hear me out.
GM should stick with what works. It already has some of the best brands and organizations in the business. Its most successful sales organization belongs to upstart Saturn. Let Saturn sell and build the company's line of bread-and-butter sedans and minivans.
Chevrolet sells many of the exciting models that will attract the most influential buyers: the Corvette sports car and its line of full-size pickups and sport-utility vehicles. Limit Chevy to those.
Keep Cadillac the "luxury car standard of the world." It could make a comeback.
Oldsmobile and Buick are more difficult. They are historic names, yet both have languished. So keep the best model of each and sell them as the Buick and the Oldsmobile at Chevrolet dealers.