Gas prices a threat to GM turnaround?
To all General
Motors executives and news reporters proclaiming the company's new SUVs a rousing success, hold your horses-- at
least through the summer. The new GMT900 siblings may be fine vehicles, but gas prices are back up and consumers
are starting to feel the pinch again. While full-size SUVs like the Chevy Tahoe and GMC Yukon (pictured) appeal to
buyers who would buy an SUV regardless of the state of gas prices, vehicles such like the Chevy Trailblazer and GMC
Envoy are arguably more price sensitive purchases. These buyers may in fact choose a more fuel-efficient crossover
vehicle instead -- a vehicle doesn't make GM nearly as much money, not to mention the fact that the company is
currently experiencing a gaping hole in the mid-size crossover segment, sending potential GM buyers elsewhere.
[Source: Reuters via Stuff.co.za]
Reader Comments (Page 1 of 2)
VL 12:01PM (4/19/2006)
Fuel efficient SUV. It's kinda like having a diet coke w/ that bacon cheeseburger, or smoking Marlboro lights.
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Sid 12:01PM (4/19/2006)
Bart - "Dad, what's a 'crossover'?
Homer - "Well, it's not quite a car, and it's not quite an SUV, but man... [laughs] So to answer your question I don't know."
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Puff Chippy 12:06PM (4/19/2006)
I can definitely see the potential to impact sales but there are an awful lot of people who have had such great experiences with these vehicles that it would take more than this to get them to buy a lesser vehicle. With 3 kids and an extended family, after having owned a Suburban I don't think we could get by without one, plus mine has been the single most reliable car I've ever owned. From BMW to Lexus to Mazda and Toyota, none have come close to the rock solid dependability of the Suburban. To me it's not a choice between SUV and crossover, it's a choice between SUV and nothing at all.
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RossL 12:10PM (4/19/2006)
Boy, you really have feel for GM. I mean, with everything going on in the world - war in Iraq, talk of war against Iran, China's rapidly growing thirst for oil, supplies becoming scarcer, etc. - only a genius could have foreseen that gasoline prices would actually RISE and that consumers might be looking for something more fuel-efficient.
Not that it's their fault. No way. It's those bloody foreigners and all those other automakers that somehow figured out that gas-guzzlers were dinosaurs. Sneaky devils. No fair!!!!
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michae lII 1:08PM (4/19/2006)
GM's SUVs get better mileage than their competitors(22MPG). Most buyers of large SUV's can afford the extra cost and will continue to buy their Tahoe's. I have a Tahoe and last year when Katrina hit the coast, gas prices hit $3.00 per gal. There was an initial shock but after a couple of months of higher prices I was still concerned but I obsorbed the cost and got over it.
The large SUVs are so desirable for some buyers they will accept the higher cost and continue to buy. The only thing that will change buying habits is shortages, when that happens people will change.
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Chris 1:21PM (4/19/2006)
The Saturn Outlook and pals are coming. What hole are you talking about? Once the Outlook hits the dealership, crossover sales fly.
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SaveGas 1:22PM (4/19/2006)
Michae (sic) III,
...gas prices hit $3.00 per gal. There was an initial shock but after a couple of months of higher prices I was still concerned but I obsorbed the cost and got over it...
Puts a smile on my face to read such comments. I predict you won't be as content when 87 regular hits $4.00-5.00 per gallon this summer.
As for GM, my prediction is that they will Chapter 11 before giving up on SUV's and large trucks. It wouldn't make business sense to drop a product that has a profit 400% greater than the average vehicle.
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oscar mild 1:25PM (4/19/2006)
People like big trucks.Look at the nissan pathinder and nissan titan .The pathfinder only gets 15mpg but people snap it up like hotcakes. The challenge for automakers in the midsize suv market will be to get better mpg.Evceryone wants better mpg (I"m guessing).With revolutionary new technology such as hybrid trucks and engines that shut off half their cylinders at light load this can be easily accomplished.Innovation is the key to success.
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klaatu 1:46PM (4/19/2006)
It certainly didn't take a crystal ball to see this coming, did it?
So, obviously, this is why GM is in such a fix. GM management don't need a crystal ball. They need replacing. Then the newbies need to grow balls. Balls enough to stare down the stupidity of the UAW.
Balls enough to say let's not pay ourselves hundreds of thousands or millions per year while laying off tens of thousands. Balls enough to say, ok, we're discontinuing the on-frame SUVs in 2 years and building unit construction real (not "lite") hybrid crossovers with a 100% improvement in mileage over SUVs, with all wheel drive, E85 capability, designed engineered and built in America, and the quality will exceed Lexus for a price of a Hyundai.
If GM can't do all of that, they need to move aside. Permanently.
Either sh*t or get off the pot. Do something outside the box, GM, and gain everyone's attention and respect.
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MikeW 2:12PM (4/19/2006)
Why the hell wasn't the 6 speed automatic standard in these things?
There was a 4 speed in 1939, from all people, GM.
But they did it wrong, and set everyone back 50 years.
I would have expected a 5 speed auto~1955 if GM got the 4 speed auto correct in 1939.
See the JATCO 5 speed auto.
1st gear-triple reduction
2nd gear-double reduction
3rd gear-single reduction
4th gear-direct drive
5th gear-overdrive(via all 3 planetary gearsets, something like one overdrive and two reductions)
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Doogs 2:16PM (4/19/2006)
"I predict you won't be as content when 87 regular hits $4.00-5.00 per gallon this summer."
Barring another Hurricane Katrina, I don't see $4.00 - $5.00/gallon happening this summer.
My bet for summertime high (at least here in Austin) is $3.69/gallon for 87.
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Erin Mays 2:21PM (4/19/2006)
Chris:
"The Saturn Outlook and pals are coming. What hole are you talking about? Once the Outlook hits the dealership, crossover sales fly."
The one where I can't go out and buy one right this second and I don't want to wait to buy my car.
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VL 2:21PM (4/19/2006)
If anything, it would push me away from those fancy high-buck "luxury" SUV's.
Higher gas prices? Do I really need the GPS-guided, Bluetooth butt warmer?
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Aki 2:52PM (4/19/2006)
One solution would be to offer hybrid SUVs--oh wait Toyota's doing that--but GM has guffawed at Hybrids saying they're not practical long term. The fact that GM doesn't have a long term solution is yet another example of their short-sightedness. They figured the 70s oil scare will blow over and people go back to big gas guzzling sedans in the 70s and 80s--and look where that got them. Funny how history verges on repeating itself. Crossing your fingers hoping all your SUVs will continue selling is stupid and dangerous.
In the bay area, gas prices for 91 octane go from $3.19 to as high as $3.41. Getting close to $4...
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peer 2:54PM (4/19/2006)
Yeah lets see how many SUV owners can afford $5 a gallon this summer.
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Mick 3:21PM (4/19/2006)
My back of the napkin calculations seem to indicate that at 15,000 miles a year and with gas at $4 a gallon, someone with a vehicle getting 22 mpg would pay about $75/mo. more for gas that someone who gets 33 mpg. Now, if you need a new car, that's one thing, but lacking that, is it sensible to go into debt $15,000-$20,00 (plus interest!) in order to save $75 a month? Spend several hundred to save $75?
Don't misunderstand me; I wish everyone would drive the most efficient vehicle their personal situation requires; but I can see some folks mistakenly taking on debt that they really can't afford.
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Puff Chippy 3:33PM (4/19/2006)
GM will have the worlds first full size hybrid SUV this year so that should help them steal sales away from the technologically inferior Toyota's, Nissan's, etc. Since GM is leading the charge for hybrid full size SUV's, the high gas prices should actually help them and hurt the foreigner makers who can't keep up with their out of date designs.
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Bob Miller 3:41PM (4/19/2006)
When these articles are written, I never hear anything about the fuel efficient cars that GM (or Ford for that matter), *DOES* sell? Nobody mentions that perhaps the Cobalt or the Aveo could be a viable option for someone in the market for a Trailblazer (as opposed to saying a Civic or a Prius should be the only alternative). GM and Ford do make economy cars, people must realize this? Right?
The other day I was listening to NPR and they were talking about fuel prices. An economics professor was giving an example of how a typical family could save X amount of gallons of fuel a year from switching out of their Expedition into a Honda Pilot. Now, this is true of course, but why didn't he mention switching from an Expedition into an Escape Hybrid? It's as if he didn't even realize that Ford made a somewhat fuel efficient small SUV, just like Japan Inc. does. Now I'm sure a lot of people are going to say things like "oh, the Pilot is better, more refined, blah, blah, blah" - but that's all subjective, and isn't the point here.
I'm not a conspiracy theory fanatic that thinks the mainstream media and the general well educated populace has it in for the domestic auto industry, but it's as if the domestic auto industry doesn't know how to deal with people constantly pointing out only negative issues and problems revolving around their companies.
The executives at GM (and Ford) have made some bad decisions. But, they have a golden opportunity right now to really reverse their negative criticisms and poor public perception by touting some of their more fuel efficient products like the Cobalt, the Aveo and the Escape Hybrid. Yes, the GMT-900s will definitely keep the lights on at GM, but they need to pound it back into the public's heads that when you visit a GM dealership, you'll find more than just SUVs to choose from. You may find a vehicle that gets decent mileage.
And yes, the new Saturn Outlook looks like it may be a good vehicle, just like the Pilot.
I myself am waiting for the new Camaro to come out. If it's as fun as my 98 Camaro Z28 was, then I'm sure it will be a great car to own. Plus, the new GM interiors are good, so just another plus for me.
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ewww 3:45PM (4/19/2006)
Excuse me Mick but where did you get the 22mpg number? You haven't been watching the GM TV ads again where they claim the new Tahoe gets 22mpg HIGHWAY on the EPA test. Everybody knows you will never ever see that number in real world highway driving. Factor in some city traffic and you are looking at the same 8-12mpg as the old model. A 4 ton 400hp SUV will always get terrible fuel economy no matter what GM likes to claim.
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Dave-in-pa 3:58PM (4/19/2006)
Bob Miller, I agree with you to a point. Exclusion of U.S. models when discussing theoretical purchse options does seem a bit odd and unfair. But then you have to consider that success in business is not always having the best product, it's often having the perception that your product is best. GM and Ford's very public failures, as well as endless comparisons and consumer magazine reports that seem to demonstate the better quality of Japanese cars has created a perception among many that is now accepted as fact. It's why GM and Ford have a long hill to climb to gain back universal respect. Unfortunately, even now, when some models are vastly improved, some still languish behind the competition. The perception won't change until they make EVERY vehicle on a par with the competition. And even then, it will take a while to convince many.
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