GM troubles [Archive] - SaabCentral Forums

: GM troubles


Jet 9-3
16th March 2005, 11:06 AM
I know they have publically support Saab in the last few weeks, but this can't be good news. When times get tough and your market position is affected, many companies start cutting deep, especially areas that are not making a profit

GM warns of 1Q loss
World's largest auto manufacturer cites lower sales in the U.S., tougher pricing competition.
March 16, 2005: 9:19 AM EST
NEW YORK (CNN/Money) - General Motors Corp., the No. 1 auto manufacturer, warned Wednesday that it now expects to post a first-quarter loss as a result of lower North American sales, a cut in production volumes, a tougher pricing environment and a more car-based sales mix.
"Clearly, we have significant challenges in North America... North America is our biggest business, and the key driver of automotive earnings and cash flow," Chairman and Chief Executive Officer Rick Wagoner said in a statement. "So it's important that we get this business right."

GM (http://money.cnn.com/quote/quote.html?shownav=true&symb=GM) (Research (http://cnnfn.investor.reuters.com/Reports.aspx?ticker=GM)) shares fell 5 percent to $32 in Inet before-hours trading. Shares of Ford Motor (http://money.cnn.com/quote/quote.html?shownav=true&symb=F) (Research (http://cnnfn.investor.reuters.com/Reports.aspx?ticker=F)) and DaimlerChrysler (http://money.cnn.com/quote/quote.html?shownav=true&symb=DCX) (Research (http://cnnfn.investor.reuters.com/Reports.aspx?ticker=DCX)) each lost more than 1 percent.


The Detroit-based company said it expects a loss about $1.50 a share, excluding special items. Analysts, on average, had forecast a loss of 3 cents, according to Thomson Financial.

General Motors had previously forecast a target of breakeven or better for the quarter.

For the year, GM expects to earn a profit of $1 to $2 a share, excluding special items, down from its previous target of $4 to $5 a share. That compares with analysts' current consensus estimate of $1.11 a share for the year.

The company said that its previous first-quarter earnings guidance was based on North American vehicle-production volume of 1.25 million. Since then, that target has been reduced by about 70,000 vehicles.

U.S. auto manufacturers, including GM and Ford Motor (http://money.cnn.com/quote/quote.html?shownav=true&symb=F) (Research (http://cnnfn.investor.reuters.com/Reports.aspx?ticker=F)), have been plagued with bloated inventory heading into 2005. Last month, both companies reported declines (http://money.cnn.com/2005/03/01/news/fortune500/auto_sales.reut/) for many of their for many of their mid- and full-sized sport utility vehicles.

In February, GM sold 309,375 new vehicles, down 13 percent over the same month a year ago, while sales at Ford fell 3 percent.

At the same time, Wagoner added that GM's other automotive businesses, as well as its financing unit, were "running in line with, or ahead of, our expectations."

The company also expects to see a negative operating cash flow in 2005 of about $2 billion, before special charges related to a settlement with Fiat and restructuring efforts in GM Europe, versus the previous target of positive $2 billion.

As its car-based sales rev up, GM said it intends to aggressively strengthen its brand portfolio and beef up its marketing support for important core vehicles, with the introduction this year of models such as the Chevrolet HHR, Monte Carlo and Impala; the Hummer H3; the Pontiac Solstice, Torrent and G6 coupe and the Cadillac DTS.

"GM's new products are just not getting the job done and the company is losing market share," said Kevin Tynan, analyst with Argus Research. "It's really a combination of three things going on. There's lower sales mixed with falling prices and higher input costs."

"The only positive spin on the situation is that GM said it will maintain capital expenditure at $8 billion for the year," Tynan added. "This means that the shortfall will not affect product development. That's what analysts look at. If the new product portfolio suffers, that will be a huge mistake and one that will really batter GM's stock." http://i.cnn.net/money/images/bug.gif (http://cnnmoney.printthis.clickability.com/pt/cpt?action=cpt&title=General+Motors+warns+of+first-quarter+loss+-+Mar.+16%2C+2005&expire=&urlID=13569104&fb=Y&url=http%3A%2F%2Fmoney.cnn.com%2F2005%2F03%2F16%2F news%2Ffortune500%2Fgeneral_motors%2Fin#TOP)

Swade
17th March 2005, 05:35 AM
I've got a story from Sweden saying how GM actually didn't do too bad in Europe in February. Whilst Saab was in the red, GM Europe actually profited.

The other bit of decent news to come out of it was that Volvo did heaps better. It just shows that it CAN be done. GM take note.

Full gig over at Trollhattan (http://redinterior.typepad.com/trollhattan/2005/03/build_it_and_th.html)

David Wishart
17th March 2005, 06:13 AM
I would like it if GM were forced to sell Saab to a better company, like Apple Computer. :cheesy:

axe
17th March 2005, 08:40 AM
I would like it if GM were forced to sell Saab to a better company, like Apple Computer. :cheesy:
:o Oh wow imagine how great that car would be! The greatest ergonomics in the history of the automobile :cheesy:

Or they could sell it back to Svenska Aeroplan... Either way let's hope GM can keep its head above the water, because if they have to start ditching brands SAAB will be one of the first to go. Maybe if that happens Ford could pick it up and integrate SAAB into its Premium Brands Group? Maybe some platform-sharing with Volvo rathern than Subaru? ;)

Toma0926
17th March 2005, 06:17 PM
what will happen to the resale value of the real saabs like the ng900 and 1998-2002 9-3? will it go up or down?

novacoke
17th March 2005, 10:27 PM
If they wanted to cut a company that wasnt making them money, why not Saturn? At least then their nixing a company that has never made money, not only that but lost over a billion in recent years... what is there good about saturn again? A jap car made in the US?

partsmanager
18th March 2005, 02:47 PM
Whatever happens, I don't think GM will sell SAAB:




A press conference will be held today at Saab AB in Sweden which should put an end to the recent media speculation about Saab's future within the GM portfolio. As our valued partners who play a key role in the future of Saab, I wanted to share this information with you directly and as quickly as possible.

The key message I would like to impress upon you is that General Motors is fully committed to the successful future of the Saab brand and its brand integrity.

The announcement today is that GM of Europe has made the decision to produce the next generation of mid-size vehicles in Russelsheim, not in Trollhattan. Both manufacturing plants submitted solid business cases with similar competitive measures. The deciding factors were logistics, capital investment, and currency, which together, tipped the scales in favor of Russelsheim for this particular mid-size allocation.

Trollhattan is an excellent facility which will continue to play a role in Saab production, as well as in the production of other GM models. Addition of the Cadillac BLS production was recently announced - a testament to Trollhattan's ability to produce premium cars. A study is currently underway to determine the optimal combination of products for Trollhattan manufacturing.

It's important to recognize, that the decision to produce vehicles in Russelsheim is separate from decisions specific to the Saab brand image.

General Motors is fully committed on a global basis to preserving the key Saab brand characteristics; further ensuring a strong and bright future for Saab. The future for Saab will include substantial growth, which will require significant investment over the next several years. GM's commitment is based upon Saab's unique role in GM's portfolio.

- The global premium segment is profitable and still growing. Saab is an integral part of GM's strategy to get its fair share of this segment.
- Saab has strong brand equity and a highly desirable customer group.
- Virtually all Saab sales are incremental sales to GM, as Saab does not compete for customers with any other GM brand.

It is clear that the brand cannot be profitable with heavy dependence solely on the 9-3 and 9-5 product lines. Therefore, we are initiating an extensive development program for Saab. Our goal is to quickly and efficiently expand Saab's model range in a number of ways, including the addition of an exciting cross-over model with 4x4 capabilities.

The expanded portfolio will help to address the specific needs of European customers and retailers as we continue to grow globally. We also know that there are no shortcuts. The portfolio must grow while preserving Saab's unique DNA. The roots of the Saab brand will continue to be in Sweden.

2005 will mark the most aggressive product expansion in Saab history.- with the launch of the 9-7X this Spring, followed later this year by the new 9-3 SportCombi, the new turbocharged 250 horsepower V-6 engine and the redesigned 9-5. This alone, should illustrate GM's faith in Saab. GM is committed to a plan that will take Saab even further in the next few years with a better cadence of new products and powertrain.

During the coming months you can expect to hear more about how GM will strengthen and expand the Saab business. I am totally confident that the future of Saab is bright and exciting and I look forward to sharing that future with you.

Sincerely,
Debra Kelly-Ennis
President & COO
Saab Cars USA, Inc.

Jet 9-3
18th March 2005, 03:32 PM
Whatever happens, I don't think GM will sell SAAB:

My company sent out a similar vote of confidence to employees last summer. 3 days before Christmas, they announced that we are getting bought out. :roll:

axe
18th March 2005, 03:57 PM
My company sent out a similar vote of confidence to employees last summer. 3 days before Christmas, they announced that we are getting bought out. :roll:
Yeah exactly... Corporate PR talk is cheap. Until Saab becomes a profitable entity within the GM lineup, I think they will always be near the cutting block.

paddy187
19th March 2005, 06:48 AM
Well a non swedish 93 in 2008, shows that GM will completely mess up Saab. Compare this to how well ford seem to be doing with their european purchases such as volvo, jaguar and land rover, and how about VAG with skoda, seat, vw, audi, bentley and rolls royce seem to have found the right formula for keeping a brands image while, having group wide floor plans, i am sure purists complain mind you.

Is there a market for cadallics in europe? not unless they improve handling, suspension etc Why don't they take the money from bringing in cadallics, which surely is in the same niche as saab, to europe market and let saab produces there own models, and compete with the bmw and mercs of this world share floor plans between cadallic and saab but make the cadallic be for us roads, i.e. straight, low speed, and soft suspension and saab be for european roads with curves fast and harder suspension. In short it seems like gm is doing what happern in the us having the same model made by differnent brands, which really worked didn't it!!!

Swade
20th March 2005, 06:34 AM
Yeah exactly... Corporate PR talk is cheap. Until Saab becomes a profitable entity within the GM lineup, I think they will always be near the cutting block.

When the bosses start saying they're right behind you, it's usually because they have a nice big knife ready and waiting.

Hard as it is, Saab needs GM. i don't think anyone else has the money to carry things and turn things around. Having said that, if GM sells Saab's soul in the process, then what's been the point anyway?? (aside from profits)

moronputz
21st March 2005, 05:51 PM
Hard as it is, Saab needs GM. i don't think anyone else has the money to carry things and turn things around. Having said that, if GM sells Saab's soul in the process, then what's been the point anyway?? (aside from profits)

Toyota. If you are talking cashed-up car companies, nothing beats them.

Would Toyota be interested in Saab - doubt it as it would compete with Lexus, but you never know.

Fla2Cali
21st March 2005, 06:17 PM
Ford has been successful with Volvo through the availability of platforms and smart market moves... I don't think all Volvos are made in Sweden, so they can be produced more efficently in other places. Land Rover is just now turning a profit and Jaguar is in the same place as SAAB if not worst. But Ford is making major moves with Jaguar in the coming years... I know you all want SAABs to be all Swedish but that can't work in a business sense... I do think that some of the designers and engineers should still come from Sweden or be stationed there to keep the brands swedish characteristics.