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What's driving GM car demand?
A GM sign on a steel beam above a highway
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Bob Moon: It's been less than a year since GM emerged from bankruptcy. But it seems Chapter 11 agreed with the carmaker. Demand for its cars is now so high, the company's skipping the annual summer shutdown at most of its U.S. assembly plants. Not only that, GM says it has the cash to finance an Opel revamp. And domestic cars are doing better than their imported rivals on the JD Power quality rankings. It's the first time that's happened in the survey's 24-year history.
We asked Marketplace's Alisa Roth to find out what's Detroit putting in its breakfast cereal?
Alisa Roth: GM has to keep its plants running all summer because people finally want to buy its cars. That demand -- along with its lean new post-bankruptcy operations -- is helping the company make more money. Which is why it doesn't need to borrow money to revamp its European division, Opel.
Michael Robinet is an analyst at IHS Automotive. He says GM's finally achieving what used to seem like an impossible goal.
Michael Robinet: The moons are aligning at General Motors with respect to the fact that the product is much better and really being looked at by the consumer in a very positive light.
One of the things GM did to restructure itself was to get rid of a lot of brands. So now there are only four: Buick, Cadillac, Chevrolet and GMC.
Steve Whitten is in charge of U.S. auto research at JD Power. Its quality survey measures how reliable vehicles are right off the line. Whitten says not all GM cars did brilliantly in the study. But it's clear that these days, the company's paying more attention to the details.
Steve Whitten: Down at the plant level, that's where quality starts. They're really able to focus on their most important brands and their most important models. And we're starting to see the effect of that in this study.
Domestic carmakers did better than the foreign transplants this year, partly because Toyota did so badly. But Whitten says he thinks the quality of American vehicles will keep getting better.
I'm Alisa Roth for Marketplace.
wait, you mean government interference doesn't automatically mean business disaster? That it could actually lead to something good? Geez, so much for all those theories...
so why is GM doing better with gov't help? Because its finally selling what people want, rather than selling big trucks that Japan couldn't compete against, then spending advertising bucks to convince people they want a truck in order to keep up with the Jonses'.
But there's also the matter of GMAC...GM was a health care company (for its retirees) that also made vehicles and traded lousy home loans.
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Steve Whitten, quality does NOT start "down at the plant level". Quality starts in the planning and design phase. High level decisions are strategically made to design quality in to the vehicle. Key reference targets and criteria are key inputs to design in "quality". Quality can be determined in many ways, whether it is the materials, fit and finish or visual/mechanical appeal that entice the prospective buyer to make the purchase, or specific component specification and engineering inputs to enable the vehicle to perform at levels that are higher, quieter, more comfortable or for longer periods of time than the competition. So often we hear of the plant and the assembly, as if cars just pop off the line like fruit on a tree. Assembly is highly automated and is a function of the assembly plant design itself. The assembly process is the *final* link in the quality improvements, and this discipline includes good management, proper training, enabling ownership in the process among other items that have been discussed before. Bottom line, it takes all involved from upper management allowing the appropriate levels of R&D and design development, accountability and experience in the purchasing process, and on to final assembly that determines the quality that JDP measures.
