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Old 04-27-2006, 10:09 AM   #1
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TTAC is at it again.. some interesting insights into GM

While I usually post GM Deathwatch just out of spite, this time TTC brought some interesting information as part of their GM Deathwatch.. they are highlighted below..

General Motors Death Watch 69: Running Out of Gas
27 April 2006
By Robert Farago

You’ve got to wonder about the mood at RenCen these days. Watching the price of gas crest $3 a gallon must make GM CEO Rabid Rick Wagoner feel like the Captain of the Poseidon as he trains his binoculars on the dark horizon and spies a mountain of water heading his way. It’s not just the horror of knowing what’s coming that makes the moment so terrifying; it’s the crew’s utter powerlessness to alter events. Only the Poseidon just happened to be in the wrong place at the wrong time. Wagoner and his mates have spent their entire time on the bridge steering GM into harm’s way. And there’s not a damn thing Rabid Rick can do about the gathering tsunami. To review…

For more than a decade, the Tahoe, Suburban, Yukon, Yukon Denali and Escalade have been the cash cows keeping The General in cream. As readers of this series know, when the winds of change gathered force, Rabid Rick called out “Steady as she goes!” Instead of developing new hybrids to capitalize on the growing anti-SUV gestalt, instead of spending money on refining and marketing the fuel efficient vehicles already in GM’s vast fleet, Rick bet the company on a quick refresh of GM’s gas-guzzlers. Last September, Maximum Bob Lutz launched the resulting GMT900-based Chevrolet Tahoe-- between the two hurricanes that decimated America’s gasoline production facilities. GM’s “new” vehicles were born under a bad sign: $3 a gallon gas.

As always, Maximum Bob put a brave face on events, claiming that The General only sought to maintain its dominance over a shrinking market. Early indications were positive. The American consumers’ notoriously short memory and sunny disposition helped them shrug-off rising gas prices as a temporary aberration, an Act of God. TTAC has since unearthed GM’s carefully-guarded GMT900 sales numbers, broken-out by model year. In the first financial quarter, GM sold 19,739 new Tahoes, 5028 Yukons and 4228 Escalades. As you’d expect, these figures are dwarfed by sales of heavily discounted '05/‘06’s: 45,104 Tahoes, 14,398 Yukons and 8145 Escalades. Bottom line? GM pushed some 96k full-size SUV’s out the door in Q1, adding about $800m to its balance sheet.

Without that profit, GM’s would have lost over a billion dollars in the first financial quarter. But the second major spike in gas prices casts a long shadow over the GMT900’s and GM’s viability. The recent pump price escalation proves that soaring prices are tied to larger, less random forces than errant hurricanes. American drivers are beginning to cotton-on to the fact that the days of cheap gas are gone. If the price of gas crests $4 a gallon and stays there for the summer-- as many analysts predict-- the gig is up. Sales of GMT900’s will tank, inventories will swell, discounts will follow and GM’s descent into Chapter 11 will gather pace.

President Bush has directed the Environmental Protection Agency to temporarily suspend rules requiring different blends of gasoline in various cities (regulations designed to reduce air pollution). If state governments follow suit, losing the legal requirement for ethanol blending, gasoline supplies could be ramped-up and trans-shipped to help meet demand. Gas prices will fall and GM's SUV sales will be saved! That’s a big “if.” There are plenty of variables that could immediately and completely offset any legislative measures designed to free-up supply: conflict in Iran, Venezuelan nationalization, the summer driving season, a terrorist attack on supplies, distribution and/or refineries; etc.

In short, this might not be the best time to be building lumbering gas hogs. Or is it? The Arlington Morning News reports that GM’s Texas factories have added overtime shifts to crank out as many GMT’s as possible: about 900 per day. Rabid Rick Wagoner has publicly admitted stockpiling parts in anticipation of a strike at parts maker Delphi. GM's Just In Time manufacturing facilities are not wharehouses; given the volatility of key components, the best way to store Delphi parts would be… a complete vehicle. Is GM is stashing GMT900’s in the Texas sun? TTAC is investigating.

Meanwhile, the General's ability to provide its assembly lines with mission critical parts is under threat. The Financial Times reports that Tier One supplier Yorozu America recently threatened to stop making suspension components if the automaker didn't fork over $3.7m in disputed payments. More worryingly, Yoruza also demanded an irrevocable letter of credit for at least three times its average monthly turnover with GM, roughly $75m. Deep Throat reports that another, much larger US-based supplier is also demanding up-front payment from GM. As reported here, if this trend takes root, GM faces a "run on the bank" scenario that would capsize the corporate mothership-- whether they like it or not.

Clearly, GM faces dangers from all directions. Pity the poor passengers trapped inside the upside down world of GM.

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Old 04-27-2006, 01:16 PM   #2
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we can add this to the interesting news abotu GM:
First half of 2007 Silverados will be "Classics"

Posted Apr 27th 2006 1:37PM by John Neff
Filed under: Car Buying, Trucks/Pickups, Chevrolet
A friend of a friend of a friend who happens to be a Chevy dealer let us know that Chevy won’t have the redesigned Silverado ready for the beginning of the 2007 model year. Thus when the calendar year clicks over the current model will continue to be sold with the term “Classic” tagged on the end of its name. The Silverado 1500, for instance, will henceforth be known as the Silverado 1500 Classic. This strategy is much like the one Ford used when it sold the last and current generations of the F-150 together for a time, the former being referred to as the F-150 Heritage.
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