Ford More Likely to Default than GM

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So what is good? My 02 Cavalier, sticker about $18K, 75K miles with only a few reasonable priced wear parts replaced? The wear parts will never include a big dollar timing belt. Super easy oil changes, no ramps needed with the change from the top cartridge. Mid 30's mpg running 75-80. It is true, it is just nicely broken in and no long term durability record. Down side: Rough, noisy, crappy Goodyears that came on it Cups in holder block HVAC controls Theft deterrent system Electric window controls where the dog can get her foot on them
 
$400 for the correct method (ovrnight sealant cure before full reassembly) on a 4.3L V6, and an intake gasket replaced properly with good replacemet materials should be good forever... a timing belt is a once every 60k item. JMH
 
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Originally posted by 1999nick: GM has been run by the bean counters too long. Car guys should run car companies.
As an accountant who audits public companies, I can tell you that ALL companies are run by numbers. Car guys should make the appropriate business case for new models, but in the end the accounting (not the accountants) will trigger decisions that will reflect favorably on Wall Street for that particular reporting period. With pressure to show earnings which reflect or exceed analysts expectations, if I can save $5 per unit on a model that sells 100K units annually, that's $500K that directly hits my bottom line. Additionally, if it is cheaper for me to create a reserve to honor warranty obligations for the repair of an intake gasket, rather than incur the fixed costs of re-engineering that gasket, re-tooling the production line, and switching suppliers, then I would elect that course of action.
 
It's not just quality or the perception of bad quality, it's the crappy looks and designs too - maybe even more-so today. I've looked at a number of US cars before buying my Scion. Some of the exteriors and mechanicals were good, but the fuggin' interiors killed the deal. Others have said the same thing. Fire these holdovers from the 1980's GM and move on. How many SUVs do the combined labels of GM make? Most of them are not only unimaginative, but duplicates of other has-been designs. Better wake up before more people lose their jobs, from workers to dealers to stockholders, it's bad. Scott
 
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Originally posted by moving2: and your point is...? 9.39 vs. 9.26 per cent...so what? Also, this isn't biased considering it is being posted by "Vortec4300", is it? Talk about useless news.
If you understood the relevance of those 13 basis points on hedging instruments like interest rate swaps, then the financial impact might be a little more obvious. I get paid decent money to apply the AICPA's Statement of Financial Accounting Standards #133 - Accounting for Derivatives to accurately report the financial impact of those figures to an investing public that does understand the financial implications, so someone apparently thinks that this news is not all that useless. I drive a Chevy truck, but I am not bound to that brand.
 
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Originally posted by Vortec_4300:
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Originally posted by 1999nick: GM has been run by the bean counters too long. Car guys should run car companies.
As an accountant who audits public companies, I can tell you that ALL companies are run by numbers. Car guys should make the appropriate business case for new models, but in the end the accounting (not the accountants) will trigger decisions that will reflect favorably on Wall Street for that particular reporting period. With pressure to show earnings which reflect or exceed analysts expectations, if I can save $5 per unit on a model that sells 100K units annually, that's $500K that directly hits my bottom line. Additionally, if it is cheaper for me to create a reserve to honor warranty obligations for the repair of an intake gasket, rather than incur the fixed costs of re-engineering that gasket, re-tooling the production line, and switching suppliers, then I would elect that course of action.
That all makes sense if you ignore the loss of sales and market share that comes from making cheap poor quality products when your competitors aren't. How that mentality working out for GM these days? While GM was thinking 1 quarter down the road others like Toyota were thinking 20 years down the road... [ June 24, 2006, 05:51 PM: Message edited by: jsharp ]
 
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Originally posted by Vortec_4300:
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Originally posted by 1999nick: GM has been run by the bean counters too long. Car guys should run car companies.
As an accountant who audits public companies, I can tell you that ALL companies are run by numbers. With pressure to show earnings which reflect or exceed analysts expectations, if I can save $5 per unit on a model that sells 100K units annually, that's $500K that directly hits my bottom line. Additionally, if it is cheaper for me to create a reserve to honor warranty obligations for the repair of an intake gasket, rather than incur the fixed costs of re-engineering that gasket, re-tooling the production line, and switching suppliers, then I would elect that course of action.
So what kind of warm fuzzy feeling does this engender when the new car is down for warranty work, and the owner is being chiselled by a Dlr's service manager?????? Tell me Mr Bean Counter, what is the effect of that scenario on future sales and the long term health of your once great carco? A pox on your kind. Another thought is what is the actual gain of saving 5$ cost per unit, if money has to be set aside to repair the shoddy part down the road???????? [ June 25, 2006, 10:20 AM: Message edited by: andyd ]
 
Well, accounting procedures aside, what is the effect on the reputation of GM's brand when a guy with an 06 Impala is telling the tale of his brand new car with the stinky cooling system running low on coolant, requiring radiator sealing pills, intake replacements in normal wear and tear and all the rest of the nightmares? Word gets around, guys talk, you hear things. It spreads. And, all the while, the Stealership is weaving, dodging and ducking to avoid covering it? And then a story of one someone that has luck with one car for 75K is supposed to compensate for the nightmares set up by all the bean-counter inspired engineering that takes place in GM's lineup? Ford is no better either. Worse maybe. Someone explain to me how intakes that are of plastic and leak get through the prototype phase? How does a cooling system that loses coolant into thin air and generates rust the first few months of ownership get to the assembly line? Exploding gas tanks? SUV's that roll over with certain tires? They know these things are going to happen, and instead of fixing the design, they plan instead for covering (by any means fair or foul) the consequences of failure. To "save" money. And in those answers lies the reason GM isn't selling their cars. Hear enough of these stories and situations, and come time to buy a car, you won't go NEAR the brand let alone spend money on it.
 
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Originally posted by toocrazy2yoo: Someone explain to me how intakes that are of plastic and leak get through the prototype phase? How does a cooling system that loses coolant into thin air and generates rust the first few months of ownership get to the assembly line? Exploding gas tanks? SUV's that roll over with certain tires? They know these things are going to happen, and instead of fixing the design, they plan instead for covering (by any means fair or foul) the consequences of failure. To "save" money. And in those answers lies the reason GM isn't selling their cars. Hear enough of these stories and situations, and come time to buy a car, you won't go NEAR the brand let alone spend money on it.
Actually, it's pretty easy for those to get into production. The engineering people design these items often as cost reduction measures in the first place. After testing is done it's determined that the failure rate is a certain percentage. The cost of redesigning the item to make the failure rate less is calculated along with the cost of the time to do so and the additional cost per vehicle of the corrected part. Those costs are compared to the potential warranty claims the new item will generate if it's used as is. It's then determined by bean counters and people who only care about next quarters numbers that the item is "good enough" and will "save the company XYZ dollars over the next financial period" if it's used. Of course the speadsheet mentality guys win and onto the car it goes. But notice, there's not a number included in the above calculations for "loss of customer loyalty due to poor quality and unreliable product offerings." That's why when you run into one of these guys they'll be able to prove to you how much economic sense their methods make, while at the same time be unable to explain why GM's market share has gone from about 1/2 of the cars sold in the US to less than 1/4 in 25 years. Must be the marketing departments fault right? [LOL!] They just don't get it...
 
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Originally posted by toocrazy2yoo: SUV's that roll over with certain tires?
That's the direct result of selling them to tards who got them confused with sportscars and/or couldn't have been bothered to check the tire pressure.
 
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Additionally, if it is cheaper for me to create a reserve to honor warranty obligations for the repair of an intake gasket, rather than incur the fixed costs of re-engineering that gasket, re-tooling the production line, and switching suppliers, then I would elect that course of action.
Thank G*D my car is not build by a company who hired you. I don't mind a car build in US, but engineered in US by someone who hired you is a big no-no. Example 1: My former employer (Maxtor) makes crappy drives that uses a 8 years old architecture and require assembly code, cost lots of money to maintain and add new features. The accountants said, "why spend the money redesign the architecture when you already got one, we save the fix cost and put it in variable cost, and it is a great deal". Now products are behind Seagate for 6 months, and people complains about reliability issues. Then the share price droped from $15 to $2 and then up to $4, and Seagate takes over the company and lay off everyone. (smart move, although I lost my job) Example 2: The current company I work for (SanDisk) has an engineer founder/CEO that always push for the next generation engineering and products, and we are 2 years ahead of competition. We build FABs that make our own chips so if prices goes up, we take advantage of that, and when the prices goes down, we release the next gen killer app and kick the competitors in the balls. Yeah, we put more money in design and manufacturing, but in the long run we win. I bet you business school didn't teach you how to quantify product quality and technologies. [ June 25, 2006, 11:14 PM: Message edited by: PandaBear ]
 
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Originally posted by GROUCHO MARX: Ultimately, it's a management decision. Management takes a long term position on business or a short term position. Financial people can lay out the landscape and recommend but they generally don't decide.
There is lot of pressure for the short term solution. Wall Street and the more vocal investors want results NOW. When a publically held company has management that looks to the long term and plans for it, it's company with some gutsy management.
 
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Actually, it's pretty easy for those to get into production. The engineering people design these items often as cost reduction measures in the first place. After testing is done it's determined that the failure rate is a certain percentage. The cost of redesigning the item to make the failure rate less is calculated along with the cost of the time to do so and the additional cost per vehicle of the corrected part. Those costs are compared to the potential warranty claims the new item will generate if it's used as is. It's then determined by bean counters and people who only care about next quarters numbers that the item is "good enough" and will "save the company XYZ dollars over the next financial period" if it's used. Of course the speadsheet mentality guys win and onto the car it goes. But notice, there's not a number included in the above calculations for "loss of customer loyalty due to poor quality and unreliable product offerings."
A strategy unique to U.S. carmakers? Or do they all do this, and do the Toyotas and Hondas of the world simply execute it better?
 
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Originally posted by toocrazy2yoo: A strategy unique to U.S. carmakers? Or do they all do this, and do the Toyotas and Hondas of the world simply execute it better?
Of course everyone does this since every item is built to a price. It's a balancing act to give a customer both perceived and real value for the money he spends with you, while still making sufficient profit as a manufacturer to survive. You need to build a product attractive enough to get customers initially, good enough to keep customers long term and do that cheap enough that the customer is willing to pay you more for the item than it costs you to build it. It becomes a problem when a company allows the numbers to be skewed too far in one direction. The classic example of this in the auto industry is the Yugo. When it appeared it was the cheapest car you could buy in the US. It was also garbage and the cars were falling apart as they were being driven off the lot. It wouldn't have mattered if they set aside enough $$ to give everyone a complete new car for free under warranty.
 
GM is not Bank of America, especially after selling off GMAC. Financials are important to running a healthy comany, but product is king if your business is making a consumer product. Unless you design a product that fills both the physical needs and emotional desires of the public, your'e doomed. While the products made by my employer are not sold directly to the public, engineering and manufacturing are well balanced with finance. Long and short term also balanced, as Wall Street does reward long term growth, and that is reflected in our rising stock price.
 
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