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Or rather: i have 'pricing power' aka less commoditized sub/brands in n america (thanks to Marchionne & co)....

Which has peaked and will now erode (fast or slow?)....

Meanwhile i will cut costs regardless but in any case: faster....

Even as all/new models nameplates and ev s etc will be launched (thankfully 'delayed'!) And brands re/re/oriented (Dodge and Chrysler).....

All very thankless financially, nevermind epic current profitability....now that cost of capital has risen. Look at where GM and even Stellantis shares languish in wall street (gross under)valuation. Their future's at a discount as it were!
Pricing power? That’s a bit of a stretch as we see they can’t hold the price increases they were able to pass during parts shortages.
Now the inventory is growing and discounts also growing.
You can’t shrink your way to long term profitability in a business with such high overhead. FCA tried and all it brought was an incredible lack of new product which did far more to damage the American brands than any previous management.
FCA’s secrets to profit was to stop product development, screw dealers on reimbursement rates for warranty work, and hurting customers with low quality cheap parts.
 
Pricing power? That’s a bit of a stretch as we see they can’t hold the price increases they were able to pass during parts shortages.
Now the inventory is growing and discounts also growing.
You can’t shrink your way to long term profitability in a business with such high overhead. FCA tried and all it brought was an incredible lack of new product which did far more to damage the American brands than any previous management.
FCA’s secrets to profit was to stop product development, screw dealers on reimbursement rates for warranty work, and hurting customers with low quality cheap parts.
It is returning to the cycle where you can produce more cars than full price can empty the lots. GM just closed a plant to "adjust" inventory and that is one way to deal with it. However, you still pay for the overhead and the labor to sit on their duffs. Alternatively, you can load up the car lots AND OR discount prices to move product. Corporate heads choice. Not a choice they want to make.
 
I mean who didn't see this coming? Sales have softened as quick as they took off. They have no new products to add to the plants to help offset the decline of, IMHO overpriced products. This is setting the stage for upcoming contract talks that are going to be very tough for both sides, and many weeks of "inventory adjustment". GM seems to be way more in tune with the business environment then FCA US does.
 
GM has plenty of credibility, high quality, and highly rated dealerships, not to mention a boatload of cash. GM has engineer Mary Barra at the helm and won't be floundering this time around, trying to cut their way into growth. No worries about GM.

I would not assume that what happened yesterday at FCA will happen tomorrow at STLA. Real change takes time. You could have written some of this in 1990 when many predicted Chrysler's imminent bankruptcy, and yet in 1996, Chrysler was booming.

I will absolutely agree that keeping the 200 and Dart in Belv. with Cherokee would have made perfect sense since they all shared a platform and it was a flex plant. They could have had 60,000 each sales of 200 and Dart and done just fine.

Part of the problem is how long it took to get the new engines. I suspect they don't have the programmers to put the new engines into that many new vehicles at once. Sergio rushed them and got glitches.
GM has downsized globally (exited opel and europe, india, australia etc), and cut sedans etc, and expensively unnecessarily brought forward huge ev (actual models not just r&d or tech) and autonomous driving investments. Meanwhile its only large non n america exposure, China, has been yielding little in the last few years and seems at-risk given geopolitics, xi jingpin arbitrary extreme policy centralization etc.

It had to do all this in a rush in the 2 years before pandemic stimulus+qe, while also propping up its share price via buybacks.

This suddenly AFTER smugly saying no to any consideration of Marchionne's formal merger offer..."we don't need to....we are busy and successfully merging with ourselves..."

This was the 3rd time GM has avoided the inevitable, merging for scale economies: failing to acquire FIAT group (then including ferrari new holland iveco....) when Marchionne offered it up (cost GM 2billion $ not to....only to have opel end up in stellantis lap in the end in any case) AND then again during 2008 when they, including bob lutz, refused to takeover Chrysler Corp as part of bailout (before marchionne and fiat were in the mix)

Since then GM has done nothing but shrink, have dismal returns on capital since 2008...and is now as perilously just n american market dependent as....FORD, with just a few pickups and suv s that make money.

And so: vulnerable to a sales and profits recession. Against that are the large subsidies from us govt for ev transition etc, so yeah share prices will stay....exactly where they were : in 2008!

Ie., when marchionne asked gm ford vw hyundai et al : do you earn your cost of capital OVER the business and economic cycles?

GM and Ford's answers are in: of course not!

The opposite is of course true of exfca pre and esp now post merger.

I believe if the GM merger had happened or even the hostile takeover bid by marchionne (which was indeed fully financed and ready to go before being cancelled by john elkann):

Gm platforms engines ev tech would'v been deployed and amortized over hugely greater GLOBAL scale including opel and china and latam: instead of needing giorgio for jeep alfa dodge and maserati now even chrysler ev s, the gme engines, the delayed ev. rollout, the annulment of the cusw and gm sedans, the abandonment of india (gm and fiat) and china (stellantis). And chrysler as well as dodge would'v gotten fuller new lineups and...etc.

Btw Marchionne started all the cancelations and launching of giorgio research and doubling down on v8 s and cancelling belvedere, dropping incentives and fleet sales etc AFTER the gm merger or hostile takeover plan A failed, then the all-set merger with VW failed (at the last minute due to dieselgate)....

Since fca was now alone, still sub scale in europe and sub scale in n america midsize fwd sedans and cuv s....but with still large net debt with a recession expected by 2020...

Margins were amped, profitability soared, incentives slashed, higher priced big v8 s etc ...

So that....stellantis etc and guess what? Look who has global scale and reach (not china though), tons of cash accumulated, by far the best margins in n america AND europe+middle east AND latam and the prospective scale economies for electrification via giorgio ev/stla large as THE only usa+canada 'platform'.

Ie who has 'earned' his cost of capital since 2008, now that the cycle is at an end (no more free money for gm ford and say vw etc)?

NOT gm. NOT ford.....but exFCA(even if u don't count ferrari).
 
Cost of capital by delaying inevitable investments is not a sustainable long term strategy. It produced awesome short term financials and long term pain - high warranty cost, fines and penalties for not meeting standards.
 
GM has been investing, though. They just wanted to fix themselves before playing Mergers & Acquisitions. To me that’s smart. They do as well as they probably can in China for now. To play more in the future they need BEVs. Building up vehicle and dealership quality will yield long term dividends. Leaving Europe was, if I recall, pre-Barra even if it finished up under her watch.

Sometimes it helps to NOT buy something else before you've figured out how to deal with what you already have. I'm sure when GM is ready to buy, there will be something to buy. Brightdrop seems to be heading for success, under the radar...

I don't see GM as avoiding capital expenses. I see them as avoiding M&A because organizational development works better.
 
GM has been investing, though. They just wanted to fix themselves before playing Mergers & Acquisitions. To me that’s smart. They do as well as they probably can in China for now. To play more in the future they need BEVs. Building up vehicle and dealership quality will yield long term dividends. Leaving Europe was, if I recall, pre-Barra even if it finished up under her watch.

Sometimes it helps to NOT buy something else before you've figured out how to deal with what you already have. I'm sure when GM is ready to buy, there will be something to buy. Brightdrop seems to be heading for success, under the radar...

I don't see GM as avoiding capital expenses. I see them as avoiding M&A because organizational development works better.
Yes GM invests. And GM is doing fairly well in some quality surveys. FCA didn’t invest and didn’t improve quality. All FCA wanted was to sell excuses and merge.
 
....because money/capital was not free for fca, while it was for gm ford vw et al. GM has indeed made more of that than ford or vw, but is really just still 'killing time and money'....which is why its shares are no higher than they were in 2009/10. The wall street Treadmill, treading water henceforth IF sales and profit squeeze happens aka recession in n america, with money/capital no longer 'free'. Of course ev transition subsidies in usa etc will see them treadmilling along.
 
Yes GM invests. And GM is doing fairly well in some quality surveys. FCA didn’t invest and didn’t improve quality. All FCA wanted was to sell excuses and merge.
“Fairly well” is an understatement, Buick is usually in the top three, while Ford and Chrysler brands are often lucky to just be above average. All GM brands seem to do well now and dealerships are way better than before. That's massive.

....because money/capital was not free for fca, while it was for gm ford vw et al. GM has indeed made more of that than ford or vw, but is really just still 'killing time and money'....which is why its shares are no higher than they were in 2009/10. The wall street Treadmill, treading water henceforth IF sales and profit squeeze happens aka recession in n america, with money/capital no longer 'free'. Of course ev transition subsidies in usa etc will see them treadmilling along.
Capital is not free for GM or Ford either. GM has been working quite hard, internally, and among other things has developed unique electric and hydrogen technologies and completed systems. Ford leaned heavily on Magna in the past, but I suspect they've invested in their own EV tech now. VW’s investments are obvious—switching from diesel to electric and now increasing their market share in the EU, their primary market.

Overall each company made their choices. GM probably did the most of the hard work that investors never care about—getting the most out of their employees and systems and bracing for industry changes. FCA, well, we know what they were doing. PSA was working on technology as well and has their hydrogen/BEV setup which is rather clever. Mary Barra doesn't get credit for working on issues which will help GM yet cost little more than attention and some missed M&A opportunities—which, given that 80% of M&A fails, is probably just as well.

I don’t own a GM vehicle but I will give full credit to Mary Barra for being the kind of CEO Detroit rarely sees, but desperately needs. Ford started with the biggest advantage but if they didn't hire Chris Theodore, they'd have nothing but antiquated trucks (because without him they'd still be steel!)
 
Cost of capital by delaying inevitable investments is not a sustainable long term strategy. It produced awesome short term financials and long term pain - high warranty cost, fines and penalties for not meeting standards.
The longterm inevitable was MERGER for scale economies, including in and of cost of capital.

Ie. ExFca has grown! While gm and ford have shrunk! (Taking 2008 bailouts etc as baseline with today's normalized nonzero cost of money due to large rate hikes by us fed)
 
The longterm inevitable was MERGER for scale economies, including in and of cost of capital.

Ie. ExFca has grown! While gm and ford have shrunk! (Taking 2008 bailouts etc as baseline with today's normalized nonzero cost of money due to large rate hikes by us fed)
Yep, just keep drinking the KoolAid.
And maybe, just maybe, study the American auto market without your Sergio-rose colored glasses.
You’ve picked the 2008 time period, which had complete production stoppage, so yeah, of course it’s up from there.
 
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I'm not against the merger. Carlos worked for Nissan here under Ghosen. He should at the very least have an understanding of the uniqueness of the NA market. I'm not sure he does, but I thought since Sergio lived in Canada he might. But I'm not sure either one understands the markets here. Just like an American wouldn't understand the European market there. I can't for the life of me understand why he doesn't put in charge people that know the markets best, give the the capital responsibility and say run it as you see fit. If it tanks, they are the fall guy and it only mildly tarnishes his ego and his standing within the greater company. North America is the crown jewel of this multinational corporation, if he screws it up, the whole company goes down .
 
FCA needs a visionary person in charge here, that has authority to make decisions here. They do not have that, and haven't had that for many many years.
Unfortunately, it’s likely another turnaround CEO type will be appointed to head NA at some point if the 10 year plans prove to be a charade with nearly nothing truly in the pipeline.
 
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A guy named Mark Stewart is in charge of North America. They got him from Amazon. I don't remember hearing about or seeing him at any time
 
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A guy named Mark Stewart is in charge of North America. They got him from Amazon. I don't remember hearing about or seeing him at any time
He hasn’t said much, doesn’t really appear to be doing much. Other than he’s going to shrink costs faster than production sinks.
 
Discussion starter · #77 ·
He hasn’t said much, doesn’t really appear to be doing much. Other than he’s going to shrink costs faster than production sinks.
If things keep moving in the downward direction, North America will be in a pickle by the end of this year and no amount of cost cutting will save them if they are not moving the gas guzzling, overpriced and outdated products in the lineups.
 
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If things keep moving in the downward direction, North America will be in a pickle by the end of this year and no amount of cost cutting will save them if they are not moving the gas guzzling, overpriced and outdated products in the lineups.
Unless the have no clue, they know what's ahead. Belvedere was the first casualty, there will be more ahead. That's the only way they know, or have been taught. Unfortunately, you can't cost cut your way out when your products are ancient history. I've said it before and say it again, look at Chrysler Australia, they were much smaller, but they had very similar problems. Old products and zero desire to "properly invest", in new products. Down the tube they went. Mitsubishi couldn't right the ship either and by 2007 they were gone. The same thing will happen here without real leaders that know the NA business here. Amazon execs, isn't what they need, IMHO.
 
Amazon has much better customer service than CDJR dealers (which is a pretty low bar), so if he can help with that at least…..
 
Amazon has much better customer service than CDJR dealers (which is a pretty low bar), so if he can help with that at least…..
Have they improved in a customers order? Amazon certainly knows that, but we are hearing folks having orders for months. Apparently not.
 
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