Bob Lutz puts GM's "record loss" in perspective
Bob Lutz understands how the automotive media operates, which is why on the same day that General Motors announced its largest loss ever, he pops up on the GM Fastlane Blog to talk about some good news: retail sales in January were up 11.2%. The interesting thing is that this record $38.7 billion loss that the automotive media's talking (too much) about is not at all attributable to GM's performance at selling cars and trucks around the world in 2007. Nearly all of it is the result of an accounting adjustment, which we explained in detail last November. It represents past losses that GM was legally allowed to wait to report and finally did in Q3 2007.
Regardless of the truth, sensational headlines that include the words "record loss" have been plastered across the interweb all day. Since it's too hard explaining how the tax system for large corporations works, Lutz instead pulls the old "bad news here, look over there" trick. He points out that GM was one of the few automakers to report a rise in sales last month at 2.1%. According to our By the Numbers calculations, GM was the only automaker with multiple brands to do so.
And Bob knows exactly how to make that impressive achievement even more impressive: take out the fleet sales and show people that retail sales in January rose 11.2%. Automakers, especially domestic ones, have been deliberately lowering their sales to fleet companies in order to restore some value to their brands. They have to overcome these lower fleet sales with higher retail sales in order to continue posting sales gains. In the past 12 months, Ford was able to do it only once, posting a 0.4% sales gain in November 2007. GM did it three times, not including last month.
If it were up to us, we'd have each automaker break down its sales numbers every month so we could see fleet sales versus retail sales for ourselves. Maybe GM will be the first to start this trend, but until then it's interesting to see some retail sales figures for January that Bob provides: Impala up 44%, Cobalt up 65%, Malibu up 198%. All told, GM sales in the U.S. were up 11.2% last month when counting just retail sales, which are the sales that really matter.
[Source: GM Fastlane Blog]
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Reader Comments (Page 1 of 4)
Patrik K 2:37PM (2/12/2008)
i like "interweb," good one!
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71cuda 2:56PM (2/12/2008)
Congratulations on getting interweb access! I'm glad you like it.
Derek 7:42PM (2/12/2008)
shouldn't it be "the interwebs" though?
Patrik K 5:29AM (2/13/2008)
yeah, I like that. so that would make us "interwebberers" or something.
Tim 2:47PM (2/12/2008)
After the November announcement about the 40 billion tax charge and the GMAC related losses it is clear that GM will be a money losing operation for a while. I think it is fair to say that GM is pointed in the right direction but how long can they continue to borrow beg to finance their operations until they start making money. That is the question.
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Joe 3:01PM (2/12/2008)
It is only in the USA that they are having trouble. If we Americans were not so stupid and would buy more American cars (and American is just as good if not better) they would not have that problem. Because we see all those Japanese products in the US stores, we say, "why not a car too"! With that kind of mentality, we are doom! They've taken away most of our industries and they did not do it on level playing field. Wake up America!!
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2004m3driver 5:35PM (2/12/2008)
Could you back up that "not playing on a level playing field" statement? Imports already have to pay an import tax when they come here. American cars have that advantage already. American car companies, believe it or not, didn't have to fight to get a good reputation, unlike Toyota and Hyundai. So I guess you're right. It wasn't a level playing field. American car companies had the advantage and they squandered it. Plus, the last time I checked Sony didn't make cars. Only electronic manufacturing companies I can think of that sells cars would be Mitsubishi(not sure if they even make TVs anymore, Yamaha (bikes), and Hyundai (not sure if its the same company). WAKE UP Americans buy whatever they want. So American car companies need to up their products and their marketing. Competition that is the true American way.
J. D. Billiford 3:05PM (2/12/2008)
>>> With all the pounding that Detroit's "Big Three" are taking perhaps they should consider merging. Of course I'm kidding, but just for grins and snickers, let's pretend GM, Ford and Chrysler did forge an alliance.
Under such a company, which we'll refer to as "United Automotive Corporation," which brands and models would be dropped, kept or developed? Who would be in charge?
Remember, this is just "make believe" and intended to have a little fun, and to get a feel of what my fellow 'Bloggers think about the situation in Detroit and the products they produce.
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DKB_SATX 10:00AM (2/13/2008)
I think a better name for the post-merger conglomerate would be the United Syndicate of Automobiles.
Gardiner Westbound 3:15PM (2/12/2008)
Reportedly the captain of the Titanic announced the ship was stopping for ice.
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icetraxx 3:17PM (2/12/2008)
To Joe:
Japan's days are numbered as a major economic power. Their population is declining and their GDP is decreasing, by 2050 Brazil's GDP will almost equal Japan's GDP (Goldman Sachs). Manufacturing that Japan and the US used to do will be moved to China now and in the near future. Nobody outsources manufacturing to Japan anymore as its too expensive, and Japanese companies (sony, hitachi,etc) have moved their manufacturing out of Japan and are facing tough competition from the Koreans (samsung, LG, etc) and now the Chinese on the corporate front. The Japanese steel industry will soon face a huge threat from the improving Chinese industry. Japan has few natural resources to rely on. The last thing the Japanese have left is their Auto industry; right now Toyota's dominance may not be numbered like the rest of Japan's industries, but Japan is still a small country that has to rely on the US for their economy, resources, and protection (US military). Toyota and Honda are the last shiny pony Japan has left. We should be more worried by the upcoming Chinese cars, they already took our manufacturing.
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TriShield 3:17PM (2/12/2008)
It's still a record loss, GM still doesn't make any money selling vehicles in North America, GM's marketshare is still sliding downwards, GM is still stretched thin propping up too many brands with too many rebadges and GM still is making headlines by canning the cars the market was looking forward to buying and blaming CAFE and everything but itself.
GM has fundamental issues and flaws that a sprinkling of new products and newly polished turds won't fix. The company needs a radical change to avoid eventual bankruptcy.
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neko 3:24PM (2/12/2008)
Wow! We could have a Duranvigator, Fusibu or even a Corviper!
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giallo 3:24PM (2/12/2008)
Yes wake up and buy domestic crap. Just keep your head in the sand I´m sure those evil Japanese will slip in quality.
keep dreaming a little dream.
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BlackbirdHighway 3:26PM (2/12/2008)
Hey Joe, explain to me which one is the American car? The Honda built in Ohio, the GM built in Canada, or the Ford built in Mexico?
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Derek 7:56PM (2/12/2008)
How about the Cadillac CTS built in Lansing, MI. Or the Chevy Malibu built in Kansas City, KS and Orion, MI. The Saturn Aura is also produced in KS. Saturn Outlook (and GMC Acadia and Buick Enclave) is made in Lansing, MI. Pontiac G6 in Orion, MI. GMC Sierra may be built in Canada and Mexico, but also in Indiana and Michigan. GM is still very much a domestic automaker. Ironically though, the UAW is probably the biggest reason why GM has moved production outside the US.
Also remember that Honda & Toyota still import most of the cars they sell here.
Thedevil 3:38PM (2/12/2008)
Hey Joe, i want you to re-read your comments . you apllaud GM for doing good outside the us, yet you call americans fools for buying foreign cars,what if people in other countries were so narrow minded like some of us ,would any of the big 3 still be around? ,its really sad to hear people talk about we as americans should only buy american cars ,but we cheer when we hear GM or ford does good in foreign countries,look at how you people blast anything from china ,i wonder what would happen if people in other countries starts to do the same to the us?
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brian 4:08PM (2/12/2008)
My Corvette is probably the only GM product I will ever own. They just haven't innovated in the past decade. http://www.tagsum.com/news/10296/Bob-Lutz-puts-GMs-record-loss-in-perspective
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Arsenal 3:35PM (2/12/2008)
1986 called....they'd like you to come back and stop bothering the nice folks in 2008.
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Arsenal 3:37PM (2/12/2008)
Sigh...nothing more weak than a reply that isn't linked to the comment it was a reply to....
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