More Sad News for GM Fans; General Motors pulls away from Opel

Now that official word has come down that General Motors is abandoning its Saab and Saturn brands, the company announced today that it will also spin off a quarter to half of its stake in its European brand Opel (and it’s British twin, Vauxhall). Opel is a prominent car brand in Europe, and one of the largest carmakers in Germany.

Ironically, until the current financial crisis hit, Opel was one of GM’s more successful operations and it helped support the money-losing North American factories. As recently as a year ago, the automotive giant was pinning its hopes on better integrating its worldwide operations, and selling Opel-designed products in the United States, such as the Saturn Astra. Now that plan may be off the table.

In the meantime, Saturn has asked its dealers for two more months to develop a plan to restructure and look for investors and suppliers as an independent company, once GM quits providing cars for it in 2012. In the end, there’s no reason an independent Opel couldn’t be the manufacturer to build cars for Saturn. We’re just saying…

Source;
http://blogs.consumerreports.org/cars/2009/02/gm-pulls-away-from-opel.html

GM disbands high-performance division

Detroit, Michigan - General Motors has disbanded its High Performance Vehicle Operations unit, according to Automotive News, and said that all high-performance projects are on “indefinite hold.”

The unit is based in the company’s technical centre in Detroit. The engineers have been sent to other divisions.

The unit created low-volume performance versions of GM vehicles, including the Cadillac V cars, Chevrolet Cobalt SS, HHR SS and a V8-powered Chevrolet Colorado.

The company said that if General Motors regains its financial health, the unit could be reinstated.

Source;
http://www.canadiandriver.com/2009/02/18/gm-disbands-high-performance-division.htm

Saturn targeted for extinction in GM's plan for survival

Sad times for Saturn dealers, my heart goes out to the families of those working there.
Jim Mateja
February 19, 2009

Roger Smith's dream is officially a nightmare.

The General Motors chairman came up with an idea in the mid-'80s to create a division called Saturn to compete directly with Japanese imports by selling small, low-priced, high-mileage cars.
The first Saturn, the SL, bowed with a 1991 model.

Smith spent $3 billion to develop Saturn. And it did create a halo with no-haggle sales and the flower left on the driver's seat after the car was serviced. It did well early on as evidenced by a 17-day supply of cars at some dealerships in an industry where 60 days is considered normal. It beat expectations by posting a profit by 1993.

But Saturn never realized its potential.

There are those who would attribute that to a lack of love—too few models updated too infrequently.

Saturn also may have suffered from the fact that Smith served as GM chairman when the automaker's market share fell to 30 percent from 40 percent, opening the door wider to Toyota and Honda with their small cars first and leading to their successful luxury divisions.

Smith retired in mid-1990 before the first Saturn came out. No small wonder that GM now plans to sell or fold the division by 2011, ironically after it finally has a strong product mix.

Thank Bob Lutz, who joined GM in 2001, for Saturn's lineup: a high-mileage compact Astra, a nifty Sky roadster, the Outlook crossover with the crucial three rows of seats, the Vue sport-utility vehicle in gas or hybrid flavors, and the Aura sedan, which beat out the Toyota Camry for 2006 North American Car of the Year.

When Lutz announced plans this month to retire at year-end, he said he wanted the division to live long and prosper. But he told Automotive News, a trade publication, that he held out little hope.

"We spent a huge bundle of money in giving Saturn an absolutely no-excuses product lineup top to bottom, [but] the sales just never materialized," he said of a division whose sales slipped nearly 22 percent last year, to about 188,000 units.

Even Lutz professes to be stumped by why Saturn hasn't done well, but he says it's obvious why it no longer has a future with GM.

"We don't have the time or the resources to take 10 years to figure it out and turn it around," he said.

The ailing automaker, which has received $13.4 billion in government loans and is seeking $16.6 billion more, plans to phase out Saturn unless a deal is reached to spin off its distribution network.

With a franchise agreement that sets dealers up as an independent distribution network, it will be easier and cheaper to drop Saturn than the $1 billion it cost GM to kill Oldsmobile in 2004.

There's still talk that the franchise agreement would make the distribution network attractive to a buyer.

"With the rest of the world in a precarious economic state, unless someone from China takes a look, no one is going to be standing in line," said Joe Phillippi, principal of AutoTrends. Jim Hossack, vice president of AutoPacific, is even more realistic.

"Saturn gets its engines, transmission and body stampings from GM, and is so intertwined with GM it couldn't be sold because no one would buy it. Either it gets spun off or it dies of old age like Plymouth did at Chrysler.

"Old age at 18? Well, yes, especially when your only cheerleader is retiring."

Source;
http://www.chicagotribune.com/business/autocorner/chi-thu-saturn-mateja-0219-feb19,0,4757890,print.column

Ward's: Smaller Players at Risk, Too

By Jerry FlintWardsAuto.com,
Feb 9, 2009 9:20 AM

We all know General Motors and Chrysler are at risk of going bankrupt in the U.S. But are they the only auto makers on the edge?

Toyota, Honda (phew) and Nissan may be losing money here, but they certainly will survive. Likewise, BMW Mercedes and Porsche are in no danger. But what about Mitsubishi, Suzuki, Subaru, Saab, Volvo and even Volkswagen?

Frankly, some of these companies may fold their tents in North America. They’ve been struggling for years in the U.S. and this is not likely to change soon.

I don’t dislike any of these auto makers, but look at their circumstances: Mitsubishi has a UAW-represented factory in Illinois capable of building more than 200,000 vehicles annually. This year production fell to 58,000 units from 79,000 last year. Sales in 2008 totaled just 97,000 vehicles, compared with 260,000 a decade ago.

Suzuki is a significant global player, the No.1 car maker in India. It sells cross/utility vehicles and pickups in the U.S, but it is best known here for small cars and motorcycles. Suzuki has an assembly plant in Canada, a joint venture with GM. But the plant turned out fewer than 13,000 Suzuki cars last year, against prior year’s 32,000.

Suzuki sales were 85,000 last year in the U.S. against 102,000 in 2007. Again, I like Suzuki, but its marketing budget can’t compete with the big boys.

Subaru cars generally are very good. The auto maker pioneered all-wheel-drive cars in the U.S., and you could say it invented the CUV with its Outback model. Yet, Subaru built just 92,000 vehicles in 2008 in its Indiana (again UAW) plant, against 109,000 in 2007.

Now Toyota has a piece of Subaru and is producing cars in the plant, too, which pushed total production to 183,000 units, more than the 147,000 produced in 2007. Subaru’s 2008 sales of 188,000 in the U.S. actually were up a notch from 2007, and up in January, too, while almost every other auto maker saw sales fall off a cliff.

Still, Subaru never has been able to become a volume player. If Toyota were not using the production capacity, the Indiana plant would be a huge financial drain.

Mitsubishi, Suzuki and Subaru all suffer from the same problem: They don’t have enough money and marketing muscle to compete with the likes of Toyota, Honda and Nissan.

Then there is Volkswagen. Talk about dreaming big. VW is building a new plant in Tennessee, and its executives are talking about tripling U.S. sales in 10 years to 1 million (including 200,000 Audis). I’ll give VW credit; last year was not a bad year, with sales down only 4% in 2008, while the market as a whole dropped a horrific 18%. And everybody seems to like the new Jetta diesel.
But VW has lost billions in the U.S. in recent years and may have lost money last year, too. Tripling sales to a million? In the dismal economic environment of the next few years, this sounds like a fantasy.

Here’s the problem. Most car buyers think of Volkswagen as a low-priced car. But VW can’t keep prices low when it imports cars and components from Europe, not with the strong euro. And it has trouble selling higher-priced models with the VW logo on the hood.

A new Tennessee plant will give VW great growth potential, but the dealership network is weak after decades of poor sales, and executives in Germany don’t seem to understand the U.S. market.

Meanwhile, GM’s Saab and Ford’s Volvo continue to struggle. Both build fine cars but are terribly squeezed for marketing money.

The point is there are other auto makers in bad shape in the U.S. besides Detroit nameplates. If all the companies mentioned here quit the U.S., we’re talking 800,000 cars and trucks. Imagine how the U.S. market would change if that volume were split up among the survivors,

Source;
http://wardsauto.com/commentary/smaller_players_risk_090209/