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Marginal: The Industry

In this issue, we take a look at some aspects of General Motors, the company that is still the largest vehicle manufacturer in the world.

In this issue, we take a look at some aspects of General Motors, the company that is still the largest vehicle manufacturer in the world. To be sure, the competitive conditions that all vehicle manufacturers must deal with are certainly daunting. When you are number-one, this has to be even tougher, given that people are undoubtedly trying to usurp your position. There is certainly an awareness of this at GM, one that seems to have given rise to greater urgency during the past couple of years. When we talk to executives at various levels of the company we get the sense that there is an understanding that there are a whole lot of great cars and trucks out there—and that the adjective “great,” although used by them with frequency, doesn’t simply describe GM-badged products. Indeed, whether it is something from Toyota or Hyundai, Chrysler or Ford, there are plenty of consumers out there who are looking for great products. . .and great deals. And they are looking everywhere. But there is something to take into account with regard to this seeking and buying, something that doesn’t always seem to be brought up when the issue of market size and volumes and sales are tabulated. Some people are looking for great products—and assuming that those products are priced reasonably, that’s the “deal” they are looking for. In other words, people are willing to pay a “premium” for great products, for products that have the attributes and the value proposition that are being sought. This premium can be translated into better margins for the manufacturer. If the question comes down to selling more or making more (as in money), wouldn’t the latter be better in the long run?

Some people at GM—especially those who are involved in the transformation of Cadillac—seem to be aware of this. And as a result, the kind of products that they are bringing to market, such as the CTS-V and the STS, are remarkable and undoubtedly profitable for the corporation. The flexibility that is built in to the Lansing Grand River Assembly Plant, where those two and the SRX are manufactured, is in line with the notion of building what people want, of switching output to meet demand, not pushing out cars and trying to create demand. This is essential going forward for all vehicle manufacturers.

Saturn is going to undergo the same sort of change that is transforming Cadillac. In fact, I would argue that the change at Saturn will be even greater than that which we’re witnessing at Cadillac. It’s not just that the plastic panels are going to go away. The vehicles that will be in Saturn show rooms in the next several months are going to be appealing to a fresh segment of consumers. And it is long overdue.

Of course, the other vehicle manufacturers are also aggressively changing what they are offering and how they offer it. While there is clearly overcapacity at the traditional Big Three, we are witnessing bricks and mortar being deployed by other companies for both car and truck assembly. These companies are certainly looking to gain pieces of the market that they don’t presently have in hand. It gets tougher and tougher. And that isn’t going to change anytime soon.

In the next several months we will be taking similar looks at the approaches, strategies, products, and processes of other vehicle manufacturers. The purpose is to provide people within those companies with a look at some of the things that are going on that they may not be aware of, as well as to help those of you who are in the supplier community to get a sense of what’s going on at several companies. Through this understanding there may come opportunities. 

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