Posts Tagged ‘General Motors’

GM Pulls Plug on Hybrid Model

July 1st, 2009 Comments off

I can’t take credit for finding this article or coming up with the discussion questions since I got this in an email from the WSJ.  Still some interesting things to think about related to product mix and the environment, a couple topics we cover in class.

FOCUS ARTICLE>>  Technology, Product Mix, Environmental

GM Pulls Plug on Hybrid Model
by: John D. Stoll and Sharon Terlep
Date: Jun 11, 2009 SUMMARY: General Motors pulled the plug the hybrid-electric version of the Chevrolet Malibu sedan for the 2010 model year due to slow sales.


  1. Why did GM abandon the production of the hybrid Malibu? What factors led GM to this decision? Does the company include any other hybrids in its product offerings? Why would GM eliminate this particular model? Why do you think GM chose to manufacture a hybrid version of the Malibu?
  2. What kind of impact does a successful hybrid model have on the overall image of an automotive company? What are the costs and benefits involved in offering a hybrid? Is there a similar technological or green product that is key for your industry or employer?
  3. Compare the hybrid offerings at GM with other automotive companies. Are GM competitors having similar or different experiences? Why? How is your company performing better than the competition? How are your employer’s competitors excelling in other areas? What should your company do to be stronger against the competition?

GM Ending Joint Venture with Toyota

June 29th, 2009 Comments off

The NUMMI joint venture between Toyota and General Motors will end as a result of the GM bankruptcy.  We discussed NUMMI back in chapter 2 because it was the subject of a (rather dated) textbook problem.

GM to cut ties with Toyota venture. By Shawn Langlois, MarketWatch

Cars Are Commodities

June 4th, 2009 Comments off

Cars have become commodities now that consumers have loads of pricing information at their fingertips that even ten years ago they didn’t have.  Sites like TrueCar have come online recently to make the pricing of cars even more transparent and further swing the power toward consumers.  A Chevy Aveo at one dealer is no different than a Chevy Aveo at the one 5 miles away, yet many dealers continue to cling to business models that are loaded with fixed costs and obscure pricing methods/systems that are from a bygone era.

The Economist has a good analysis of the situation on their website comparing car dealers of today with travel agencies a decade ago.

Kicking the tyres. May 22nd 2009. From

To top it off, there are reports today of dealerships that are lobbying in Washington (and politicians lobbying on their behalf) to stay open even thought General Motors or Chrysler have terminated their franchises.  Perhaps a better idea for the “new” Chrysler and GM would have been to terminate all dealer agreements and market automobiles using a new system that doesn’t have so many built-in costs…maybe we’ll get there someday (or maybe I’m way off base) but with the government now involved I expect it to be a slow process.

General Motors and the Long Road to Bankruptcy

June 4th, 2009 Comments off

The auto industry gets a lot of attention in this course…most of it negative and most of deserved.  The Economist made the General Motors bankruptcy its cover story this week in most of the world and published several pieces about the long decline of GM that led to this point.  Although the current economic situation is easy to blame, at best better times would likely have only delayed the collapse of the once dominant car maker.  The story of the GM collapse can be related to many parts of our course from working with the value chain (unions, customers), to quality concerns, to fixed/variable costs management, to closing under-performing segments earlier, etc.

The filings lodged at 8am with a court in Manhattan were testimony to the size and complexity of the 101-year-old company and to the scale of the problems that had finally overwhelmed it. Until 2008, when it was overtaken by Toyota, GM was the world’s biggest carmaker, producing well over 9m cars and trucks a year in 34 different countries. It has 463 subsidiaries and employs 234,500 people, 91,000 of them in America, where it also provides health-care and pension benefits for 493,000 retired workers. In America alone, it spends $50 billion a year buying parts and services from a network of 11,500 vendors and pays $476m in salaries each month.

The decline and fall of General Motors. Detroitosaurus wrecks. Jun 4th 2009. From The Economist print edition

The bankruptcy of General Motors. A giant falls. Jun 4th 2009. From The Economist print edition

Back To The Future at GM

June 1st, 2009 Comments off

The Economist posted what turns out to be a rather accurate piece that first appeared in print way back in 1989. In the context of what has happened in the 20 years since it was written it is very interesting to see many of the predictions (the biggest being the government rescue and bankruptcy) come true.

On a clear day you can still see General Motors. Dec 2nd 1989. From The Economist print edition

NUMMI – Joint Venture of General Motors & Toyota

June 1st, 2009 Comments off

A couple weeks ago in Ch 2 when discussing direct/indirect and fixed/variable costs we had a problem that referenced a company called NUMMI (New United Motor Manufacturing, Inc.) that made Geo Prizms and Toyota Corollas.  Obviously (since Geo hasn’t been around for 12 years) that is a dated problem, but NUMMI is still alive, if not well.  Given that half of the partnership is comprised of now bankrupt General Motors (the other partner being Toyota) the status of NUMMI is kind of up in the air.  Also, the only General Motors car being built by NUMMI currently is the Pontiac Vibe and GM previously announced that the Pontiac brand is going to be eliminated.  The plant still makes Corollas and Tacoma pickups for Toyota.

Some NUMMI Links:

Globalization and Mergers

May 19th, 2009 Comments off

As I mentioned last week in class in relation to the SMA Module and the question about Kodak/Olympus in the study assignment problems, more companies are operating in a global environment than ever before.  Even companies that don’t know they are operating in a global environment probably are just by the nature of their supply chain operating at least partially overseas.  The biggest example of globalization, perhaps, is when large multi-national companies form alliances or merge such as Anheuser-Busch and InBev last year or the current Fiat-Chrysler-Opel union that is trying to form now.

Today the Economist posted a lengthy piece on their website (I’m not sure if it will appear in print as well)  about this latter merger and it is worth reading for the insight it gives into the issues faced by Fiat trying to pull this off and the input/impact of the German and American governments on the process.

THE bold attempt by Sergio Marchionne, chief executive of the Fiat Group, to use the crisis that has overwhelmed Detroit to forge a three-way merger between Fiat Auto, Chrysler and General Motors’ European arm, Opel, has been greeted both with admiration (for his chutzpah) and scepticism (about his ability to pull it off). The sceptics say cross-border mergers in the car industry have a poor record and that Mr Marchionne is biting off much more than he can chew.

Marriages made in hell. May 19th 2009. From

For a look at the downside risk of such a merger, one needs to look only at the situation a couple years ago that also involved Chrysler and one-time merger partner Daimler-Benz.

It was billed as a “merger of equals”, but in the end the participants could not make a go of it and their marriage failed. The break-up announced this week of DaimlerChrysler, a transatlantic carmaker created by the union of Daimler-Benz and Chrysler in 1998, involves the sale of 80.1% of Chrysler to Cerberus Capital Management, a private-equity group, for $7.4 billion–though once everything is accounted for, Cerberus is actually being paid to take the troubled American carmaker off the hands of the German company, which will be renamed Daimler.

Divorced. Economist; 5/19/2007, Vol. 383 Issue 8529, p67-68, 2p