- Source: Chevrolet

General Motors are desperately trying to save themselves

In politics, you have election promises. In automotive, you have technical partnerships.

7w ago

54K

In addition to all of the millions of other things I do on a daily basis, I trade on the US markets. I'm also Australian, which means to trade on said markets you normally run your entire life on Red Bull (not that wings help much with ETFs). I also help my closest friends and family do the same (mostly because it's neither taught nor widely recognised as a legitimate way to make money in Australia). It creates a bit of a community around the people who trade with me and whether a good or a bad day I enjoy the discussion and analysis.

On Wednesday this week GM and, a relatively new battery manufacturer, Nikola announced a technical partnership based around research and development on new electric vehicles.

On Wednesday this week GM and, a relatively new battery manufacturer, Nikola announced a technical partnership based around research and development on new electric vehicles. The week before another partnership was announced with Honda to re-push into the Asian and European (and subsequently Australian) markets. As a result, last night I had friends in my little trading community come to me (in amongst the current tech-sell off we're seeing with the big technology stocks) and ask whether GM and Nikola were good buys right now? They'd seen the two stocks make positive moves and they were interested. And so they should be.

Here's the thing, technical partnerships are not going to save General Motors. GM is in a hole the size of the mass craters you see on the moon. They buggered up their last round of manufacturing and technical partnerships, they pulled out of almost all big markets on earth apart from the US and they cut their losses in Asia. The latest announcements feel a lot like too little too late. It gets worse as well.

These technical partnerships mean that General Motors need to take part of their supply chain outside of the US again. Automotive manufacturing was one of Donald Trump's original election points in the US. He wanted to move some of the biggest worldwide supply chains from their international homes back to the US. And if (or when) Donald Trump gets re-elected (the love for friends in America makes me wish he won't, but the opportunity to capitalise on his re-election makes me wish he will)? I can't imagine he's going look too favourably on one of America's great car makers out-sourcing their international supply.

But General Motor's problems go way beyond the surface. Because all of these surface solutions are solutions to new problems. They're solutions to GM's exit from Australia and some Asian markets and they're solutions to GM's lack of research and development into renewable energy, a sector which in America is damaging oil in a big way. General Motors has a much bigger problem moving forward which they need to address first.

Source: Ford

Source: Ford

The General Motors product, whether it be Chevrolet, Cadillac, Buick or GMC, is trash and worse still it isn't keeping up. I digress, Ford (last month) unveiled their new Bronco and the interior for the first time in recent memory didn't look like a Ford interior. Oh no, the Ford interior looks like something that came from the Land Rover special vehicles department or the Aston Martin Q department. It looks premium, and the software on the infotainment system looks next generation as well. It's not just Ford either, their luxury vehicle arm Lincoln has been getting the hang of that luxury interior feel as well.

Source: Cadillac

Source: Cadillac

Stock is a big problem for GM as well. The feather in General Motors' cap, the Corvette, has been back-ordered in the US for almost 12 months. The stock is in such a bad place that it's looking like RHD conversions will make it to Australia before American customers get their hands on cars like the much-anticipated Z01.

It's been a painful and slow killing as well for General Motors. The good news is with the slimming of the business the company is starting to look like it has potential to be profitable again. The bad news is the partnership that was announced with Nikola for battery supply on Wednesday was quickly countered by the new entry into the market by the Saudi Arabian government, Lucid. And that car (the Lucid Air) is looking like a genuine bad boy. Not just that but the shift of the Saudi's into EV manufacturing tells you just how advanced the big players in energy are on renewables.

So how does General Motors save itself now? Well, it doesn't save itself by playing catch up, that's for absolute sure.

So how does General Motors save itself now? Well, it doesn't save itself by playing catch up, that's for absolute sure. But at the same time, it needs to catch up. For what it's worth, General Motors needs three things. It needs capital, it needs established research and it needs strong product to springboard off. So my suggestion? It needs to merge or purchase a company that is far more advanced in that field before it gets gobbled by its competitors brand by brand.

Here's the thing GM, I get it, it's hard to admit someone else does something better than you after you've been doing it for decades. But it's getting to the point that almost everyone is doing it better than you. And it's causing you to miss opportunities. Like for example the opportunity in the Australian luxury vehicle market. You could've ditched Holden with the demise of the Commodore altogether and replaced it with Cadillac which still has prowess in the Australian market.

Or the Tesla opportunity. How could you have thought that producing a $20,000USD Electric Vehicle which was stripped to the bone compared to the competitors in market and with a far worse range was ever going to be a successful deal? The car wasn't even American, it was a copy of something from Europe. You should've poured cash into Cadillac's research and development department and have that manufacturer premier the best of your product. Luxury brands act as a two-pronged sword, profitability and press. You sell for more and you get to give your new tech exposure in the process.

At this stage of the conversation, which was on Facetime thanks to Coronavirus, I'd been talking non-stop for almost 30 minutes. My friend who'd suggested the buy was glassy-eyed and obviously not listening. He finally chimed in to say "Well, I already bought the stock". The rest of us sat silent for a minute digesting the information. He then justified the decision with the most Robinhood thing I've ever heard. "the share price was and still is rising".

At the time of writing this article, it's Friday in Australia, just ending Thursday in America. While the tech sell of last night continued (in a much more subdued form and possibly no form at all) an interesting stock caught my eye. General Motors ended trading with almost 9% of its total value wiped out since Wednesday. It just goes to show that I'm not the only one who believes General Motors' problems extend far beyond simple technical partnerships as solutions. A move I compare closely to an election promise. Empty until fulfilled.

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Comments (76)

  • Many moons ago, Buick owned GM.

    Imagine if that were the case today.

    If GM produced a good sized 2 door GT Cadillac , a coupe , 3 door fast back or dual function tail gate / hatchback , or sport wagon , with useful space in the back , and , if it shared the platform and bodywork with Buick and Chevrolet to keep production costs down, country doctors might buy the Cadillac or Buick version , and people on smaller incomes might buy the base model Chevy version .

    Hey, you could call the 3 door Chevy version a Nomad .

    I say this because I've heard that potential customers are looking for a large coupe , but are frustrated because Holden stopped making the good value for money Monaro , ( which would have been a good platform for a Holden Caprice , Cadillac, or Buick coupe . )

    Coupe choices are limited, but once they weren't.

    Other frustrations are the prohibitive cost and high maintenance cost risk of owning a large 2nd hand Mercedes, BMW , Jaguar , Aston Martin , Lexus or Audi coupe , which is a bit of a shame , because otherwise they aren’t bad cars .

    If Ford made a new Gran Torino , or Lincoln , based on the Mustang platform , buyers might consider it , and I’m sure a lot of professional people who don’t live in cities would also be in the market for a decent highway tourer , especially if one of the body shape options was a 3 door hatchback ( 3dh ) , with a fold down tail gate ,for holding football tailgate parties , and also a fold up hatch to shelter the bread rolls, burgers, coleslaw and Labrador from the light drizzly rain .

    ( Go Wildcats )

    Would GM and Chrysler then field an enclave of models ?

    There is talk of a plan to construct a touring road that would run along past lake Somerset , near the lucerne farms , in sunny Queensland, with its electra blue skys .

    That would suit fishing and Labrador enthusiasts like me just fine , and I’m sure I’m not alone in that regard , but I can’t find a decent reasonable priced luxury coupe , or 2 or 3 door anything.

    It doesn’t exactly make you feel special.

    Speaking of feeling special, wouldn’t it be nice if Australia had its own Riviera ?

    If you remember back to 70s , in between the Apollo moon landings , there was a tv show , “ The Persuaders “, where Roger Moore , like a centurion on a gap year , drove a super Aston Martin , which I would class as a proper GT .

    Hey , there’s Roger , out touring , enjoying life , liberty and the pursuit of happiness along the Riviera.

    Back in those days , an Aston was relatively speaking , more reasonably priced , and doctors could actually afford to buy them .

    But today ? Not really .

    Driving a large , luxury 5 seat GT 3 door hatch ( 3dh ) when you are single , newly married, or with 3 kids and a couple of labradors in tow , could become a nice alternative to the SUV or minivan / people mover scene .

    After all, now that stereo equipment fits into your pocket , picnic snacks can be delivered by drone via the app in your pocket , and furniture can be bought flat packed , do I really need the cavernous space of an elephant sized wagon ?

    So with that in mind , where is the current American crop of athletic GTs ?

    I mean America is famous for its athleticism.

    There are Gran Sports :

    Vale, Aspen , Whistler , Jackson’s Hole , intercollegiate athletics..., laCrosse , Jimmy Connors , John McEnroe, Chris Everett-Lloyd , Flo-Jo, and horse riding events like the Grand National .

    Americans look like they could use a mildly athletic holiday .

    A bit of a run around in the fresh air .

    Come on GM : design a lean fresh GT specifically for making nice skiing , tennis and track and field memories.

    Let’s strap those skis , fishing rods , and tennis bats to the roof , and have a bit of a skylark.

    Hmmm , Skylark, you know , that would be a nice name for a car .

      1 month ago
    • I’m honestly impressed that you had the energy to write this masterpiece of a comment. Have a like and an award.

        1 month ago
    • Not so fast, I owned a Skylark and it was complete rubbish. It's half the reason I've sworn to never own another GM again. But that was a very well written reply you wrote.

        1 month ago
  • I've been meaning to write something of this caliber about GM for a long time, and I couldn't find a way to write it that didn't make me sound like a whiny little kid because his favorite cars were going out of production, while the rest of the company is in a mismanaged tailspin. But this, this is exactly how I would've discussed this. Great job!

      1 month ago
    • That’s exactly what it sounds like. They had to grow up at some point. The age of the car is over.

        1 month ago
  • GM killed (sorry, retired) few good brands, including Pontiac and Holden, right. Is this what they call karma?

      1 month ago
    • Don't forget Saab, Saturn and Oldsmobile.

        1 month ago
    • Thank you for reminding. I also should add, nearly killed Opel, had it not been for Angela Merkel personal intervention 2009, during Global Financial Crisis. She even went to US to sign Government buyout of Opel. When GM realized she is...

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        1 month ago
  • 32 years ago I interviewed with GM. I told them flat out, just copy the Honda Accord, it's way better than anything you're making, and people will buy it just because it says Chevrolet on it. They retorted that they had made every major automotive engineering advancement in the past 50 years. You just can't change that kind of culture. Let them slim down to making nothing but pickups and SUVs for the US market, they've done nothing but piss away money in those 32 years, including taking money from the taxpayers.

      1 month ago
  • Serves them right. It's a shame we in China still can't get away with their shit.

      1 month ago

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