GM Insider's Book Reveals Secret Project Leading to Crumbling of GM's Empire

[leftchick]

"Project 2000: The Rise and Fall of Oldsmobile." GM Insider's Book Reveals Secret Project Leading to Crumbling of GM's Empire :

http://www.globalgiants.com/archives/2007/08/


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Horvath continues, "GM's attitude and regime change in the mid-80's allowed Japan to make significant inroads in the U.S. and world-wide auto industry."

Failure to recognize consumer demand for a Toyota Camry-type or Honda Accord-type car, and failure to compete in this market, partly led Toyota to becoming the world's number-one auto manufacturer through June of 2007, Horvath says.

Tatsuya Mizuno, a Fitch Ratings auto analyst, said it was inevitable that GM would hand over its crown to Toyota at the end of 2007, ending its 76-year reign as the world's best-selling automaker.

"One key element in GM's demise was the closing of the Oldsmobile Division. From 1970 to 1985, the Olds Cutlass was the number-one selling car in America and Oldsmobile was the most sought-after franchise in the world. Oldsmobile went from best to worst in 20 years and became a dinosaur in October 2005," says Horvath.

Horvath said another key element contributing to GM's declining share was a secret project that GM called "Project 2000" which was the systematic elimination of dealers to take place by the year 2000. This benefited GM's upper management at the expense of the dealers who were betrayed.

Horvath, who had a front seat to the "Project 2000" scheme hatched by GM, offers an insider's viewpoint in his book why GM has lost its spot as the perennial number-one carmaker to Japan's Toyota, and backs it up by hundreds of documents contained in the book. |GlobalGiants.com



http://www.theautochannel.com/news/2007/09/25/064135.html

General Motors' 'Secret Project' is the Key Factor in Ongoing Market Share Decline, Former GM Insider Charges in Book


MIAMI, Sept. 25 -- That General Motors lost its spot as the world's perennial number-one carmaker to Japan's Toyota this year, comes as no surprise to Robert Horvath, a former GM dealer/owner-operator.

Horvath, who for 40 years sold GM's once-mighty, but now-defunct Oldsmobile brand, had a front seat to a scheme hatched by GM to consolidate dealerships, which he details in his book "Project 2000: The Rise and Fall of Oldsmobile, a Division of GM," that he says helps put GM's current problems in perspective.

"GM sought to destroy dealers through their so-called secret Project 2000, which GM defined as the systematic elimination of small dealerships by the year 2000, and was designed to consolidate car sales at large auto malls," Horvath says.

But Horvath said Project 2000 contributed not only to the downfall of Oldsmobile, but to GM slashing 34,000 jobs, closing 12 plants, its ongoing market share decline, and losing its #1 spot this year which it had held for 76 years. It led to Toyota becoming the world's #1 Auto Manufacturer through June 2007.

"From 1970 to 1985 the Olds Cutlass was the number-one selling car in the U.S. and Oldsmobile was the most sought-after franchise in the world," Horvath says. "As a result of disastrous business decisions, Oldsmobile went from best to worst in 20 years and became a dinosaur in October 2005."

How does a company that used to make half the world's cars now only command a 13 percent market share and become the number-two car manufacturer behind Toyota?

Horvath offers up an insider's viewpoint, backed up by hundreds of documents which are contained in the book, that spell out an answer he says is rooted in malice and corporate greed.

"The regime which took over GM when the disastrous 'Project 2000' was hatched," Horvath says, "decided to change their corporate policy which only benefited GM's upper management."

"American business is people, the abuse of whom leads to the collapse of business itself," Horvath says.|

[Ganja Ninja]

1. I never understood why they started Saturn at the same time they

killed off Oldsmobile. Where was the sense in that?:shrug:

[JHB]

3. My wild-ass guess:

Disclaimer: I have no actual knowledge of why, just a supposition based on corporate behavior over the last few decades:

Olds likely had some sort of contractual obligations (royalties? pensions? union contracts?) that the Cereal Killers running GM decided they could circumvent by choking off Olds and starting a new brand in the same market. Maybe tax breaks were involved too.

Bottom line: it was a way to shuffle more money into their own pockets. That's all the reason they'd need.

[JVS]

4. Saturn started several years beforehand.

The Branding was different too.

Saturn was aimed at people who were disgusted with the GM shitheaps of the 1970's and 1980's. That's why pains were taken to to present it as a new kind of car company with a new way of doing things and also why Saturns are sure to look different from their platform sharing . Also, IIRC it was based in SC where labor laws are looser.

[Ganja Ninja]

7. I know it was all a marketing ploy but that's an awful long way to go

just for whatever slight marketing advantage they gained. Wouldn't it have been better to market the Saturn's through an already existing dealer network and try to salvage a brand? Seems rather expensive to kill off an existing dealer network and brand and create a new one from scratch.

[bullwinkle428]

12. Saturn production facilities are located in Tennessee

[AndyA]

2. I always thought killing off Oldsmobile would come back to bite GM in the butt.

It was their middle of the road division.

Over the years, it offered economy models, sporty models, family cars, and luxury cars. When I was in high school and college, having an Olds Cutlass as THE car to have. They were everywhere, and they were good, dependable cars.

You could buy a Ninety Eight or Toronado and have one of the most luxurious cars on the planet, without all the snobbery that came with buying a Cadillac or Mercedes.

They tried to convince people that it "wasn't your Father's Oldsmobile," when that was exactly what people wanted! They remembered their parents Oldsmobiles, rock solid, dependable, and nicer than the neighbor's Chevrolets, Pontiacs, Dodges, and Plymouths.

GM made too many carbon copy models in an attempt to cut costs. What GM should have done was cut executive pay and bonuses, and let each division build the cars they really wanted to build. They should have let the designers design what they wanted to design, and let the engineers develop and create unique, original cars that weren't like everything else on the road.

GM tried to be Toyota too late, when it should have been building better cars than Toyota, and offering people a choice. I can't tell a Toyota from a Nissan from a Mitsubishi from a whatever. They all look the same, and are available in 20 shades of gray-beige. Blah. Boring.

I can only think of one or two cars that I've even liked over the last decade or so, regardless of the make or model. :shrug:

[leftchick]

8. my very first car was a 1967 Oldsmobile Delmont 88

It was 10 years old at the time I got it but it was loaded and still felt like a luxury vehicle. I called her Della. :)


She looked just like this...



Until I totaled her. :cry:

[FarCenter]

5. The Saturn was a vehicle with fewer options and more standard prices

In the '70s and '80s, the domestic cars had a myriad of options and option packages, which made them far harder to manufacture. The ordering process was also more complicated, since a lot of cars were special ordered, instead of being bought off the lot. The complexity of options also was used by the dealers to conceal true costs from the customers and the customers felt they were getting a raw deal.

The imports, due to shipping delay, started out by offering far fewer options and a much more standardized package. The dealer shenannigans were limited to dealer-installed options, (which Toyota dealers try to exploit as much as possible, in my experience).

So the Saturn brand was an attempt to compete with the imports.

These distinctions may be less important today, since the bigger "imports" now assemble in the US. But Hondas, for example, are far more standardized than the Big Three brands.

[FarCenter]

6. A good fraction of the dealers still need to be eliminated

In the hearings, one of the CEOs gave 300,000 as the number of dealers and dealer employees.

On a sales volume basis, the Big Three have about three times too many dealers.

The dealer networks are sized for an era when Detroit had a much larger market share and when cars needed more frequent and extensive maintenance.

[KurtNYC]

9. GM was only making money on car loans and other lending

actually making cars was a money loser for them.

Perhaps there is something wrong with corporate heirarchy. Way too many people are rewarded and promoted for playing their politics well. There are probably secretaries at GM that have a better idea of how to run the company than the people in power there. There is an old saying that goes:

"In corporations, employees rise to the level of their incompentency."

[Karenina]

10. The "Peter Principle." Great book!

[KurtNYC]

11. a co-worker of mine told GM that they should stop making cars back in 1999

they laughed at him of course, but he did the whole breakdown of what were profit centers versus cost centers in the company and making cars was a net loss. The direct cost to make a car was ~$6,000 and that sells for ~$18,000. But the overhead (including dealerships) on auto manufacturing killed all that gross profit and came up as a net loss.

I'll have a look for that book.