Toys4RJill

I think the cancellation of some large GM cars might be happening sooner than we think. Sad, I like the Lacrosse, never did like the Impala all that much.


Buick LaCrosse Sales Decrease 44 Percent To 4,053 Units In Q2 2018

Read more: http://gmauthority.com/blog/2018/09/...#ixzz5T9b8uXq5

mmarshall

If those two models get discontinued, I might (?) be done with GM....you can't keep customers if you don't produce what they want. Ditto with Ford, if the MKZ and Continental get the axe. Three or four years down the road, I'd probably be looking at a Cadenza, G80, or ES350...possibly an Avalon, if they don't screw it up again like they did in 2013.

Fizzboy7

The market is speaking with their dollars and GM is following the message. If people wanted the cars, they would be buying them, and GM would not have to discontinue them. If people do not want those cars, sales fall, and GM discontinues them. The market trend(s) dictates what sells and what is produced.

mmarshall

I agree.......but not everyone is an SUV junkie. Some of us still DO like sedans, especially big comfortable sedans.....look at bitkahuna's new G90, a perfect example. And, the way I see it, if sedans bring in fewer dollars than SUVs, what's better...fewer dollars, or NO dollars? No sedans means no sedan-dollars. Simple math.

Sulu

I do not and cannot agree. Manufacturers of consumer products -- and automobiles are most definitely a consumer product -- must take risks in order to stay relevant (if not stay ahead) in a free-market society. If a manufacturer takes no risks with product but rather leaves it completely to the market, they risk being late to the game and losing out (perhaps fatally) to competitors.

It has happened before. Ford and GM, prior to that fateful recession of 2007 / 2008, had relied too much on its trucks, ignoring its cars. When the market shifted, they had no good product to sell. The rest is history.

As examples of risk-takers, I can point to Sony with its Walkman and Apple with its iPod portable, personal music players. The products may have been slow on the market initially but soon enough they took off and were being copied.

Tesla is another innovator and risk taker. Even GM itself, with its original Volt, was a risk taker.

These risk takers helped to define new market niches and so showed consumers that they were worth taking a look at.

Fizzboy7

That can be true on occasion, but you are talking about fractions of the industry. More often, it is volume sales and the core of a market that pays the bills for most manufacturers. Niche areas and new risks have a roll, but generally do not dictate business direction for the industry. The topic here is sedan sales- those who meet the appeal/demand and get the sales and those who do not.

Toys4RJill

How is anyone taking a risk by producing these large sedans that are not selling?

Every car company takes risks. The KIA Boreggo was a risk LOL

bitkahuna

iTrader: (20)

yeah it's bold to sell cars and lost $15K on each one. when will the shareholders wake up?

shadow1118

Tesla is a technology company with a car company division. They are not a real car company.

FrankReynoldsCPA

Well I don't believe you've ever studied managerial accounting or production management. No management group worth its salt is going to produce everything they think can even get a few dollars.

"what's better...fewer dollars, or NO dollars? No sedans means no sedan-dollars. Simple math."

This line of thinking would put a lot of companies right in the ground. There are things like production capacity, opportunity costs, etc. Running a production line for a model isn't going to guarantee profit just because you have some sales. It's better to have NO revenue from a discontinued line than to have SOME revenue from an unprofitable line.

Every Lacrosse that they manufacture represents the decision NOT to use that capacity to manufacture something far more profitable. Just because it's something you would buy doesn't mean it's what the public overall is buying. The majority of people buying large sedans are mostly beginning to die off, and that's not the customer base for long-term profitability.

Toys4RJill

Agreed. Eventually there comes a time where you have to just close it. Redistribute and shift the investment for a new design to something else.

Not just that. But the LaCrosse is made in two plants, one in China and one in the United States, the Impala is also made in two plants, one in the United States (same location as the Lacrosse) and in Canada. Need to just put them all in one location if sales are slowing receding.

mmarshall

What is "learned" on paper, or in a classroom, doesn't always apply in real life. More than a few CEOs, who tried to do things by the book, have steered their companies down less-than-optimal paths.


There is nothing inherently un-profitable about producing sedans. Look at the profits that the Camry, Accord, and Taurus brought in for decades.

The argument that the older, large-sedan generation is dying off is only partly true. That is true for the World War II generation (the parents of the Baby Boomers), who are generally in their 90s now, and passing away on an average of 1000 a day. But the people in my age group (the Boomers themselves) are living (and driving) longer than ever, thanks to advances in medicine and living standards. Most of us will be around probably another 20-30 years or more....and yes, still looking at large sedans.

FrankReynoldsCPA

I assure you, this is one lesson that is applicable in the real world. Cost-benefit analysis are a VERY real thing. You're telling us that your casual hunch based on "I buy this, thus many people will buy this" outweighs the decision making process of the automakers' executives who have run the actual numbers and projections. You can't dismiss an established practice because "we don't need book learning"



Companies like profit....do you think they would be discontinuing them if they were profitable enough? Remember that the Camry and Accord are produced by automakers that aren't burdened by archaic UAW contracts. They can open plants in states like Georgia and Tennessee and produce these cars a LOT cheaper. Ford hasn't sold the Taurus in any real volume for years. It just doesn't make sense to devote the resources required to sustain a model line for a car that only sells 30,000 a year, unless it makes large profit per unit(like a Raptor or GT350).

Just because something brought in profits for decades doesn't mean they can continue to bring in profits. Cultures, trends, industries, etc all change. American car buyers are trending more towards CUVs that allow them more interior cargo space and a higher seating position at a small fuel economy loss. It sucks when you're not part of the new majority(for example, I'm devastated at the loss of the manual transmission, but I know that it wouldn't make sense to offer it anymore from a financial perspective). But you have to understand, Mike....you're in a growing minority when it comes to auto buyers. It doesn't mean your tastes or anything are wrong. I see that you enjoy your Lacrosse immensely, and it is serving you well. I'm happy that it does. I also enjoy your reviews. But the market these days is trending towards larger vehicles or sportier cars.

Yes, but the demographic is still shrinking more than it's expanding. And I'm even seeing a lot more boomers adopt CUV's than before. Honestly, they're great vehicles for an aging person. I remember my grandparents selling their Le Sabre and buying a minivan(and eventually a Pacifica, the CUV) because it was easier for them to slide in and out of these vehicles than to climb down and back out of a sedan.


Now...i'm going to stray off into some pure speculation of my own. I think another future threat to small sedans is the fact that many utilitarians(who only buy a car because they need to get from A to B, and they just need the bare essentials) will cease driving altogether over the next couple of decades. They'll turn to ridesharing, telecommuting, and mass transportation. Driving isn't part of their identity, they don't care how the get to where they're going, and they'd rather not have the costs of owning a car. It's not a lifestyle I could embrace, but I do recognize it's growing out there. And those people mostly bought boring sedans.

mmarshall

Both of us, so far, have also failed to mention the obvious.....self-driving vehicles, which, if and when (reasonably) perfected, will allow those to still get around who have (or will have) problems driving themselves. Self-driving vehicles, of course, can come in either sedan or SUV guise.

All4Lexus

Tesla has a goal to fundamentally change the transportation business into the 21st century. It doesnt happen over night but by golly, each endeavor they pursue gets bigger and more transformative. (roadster, model S, Model x, model 3). What's left can get into model 3/suv variety and trucks, and semi trucks. Everyone else lacks a real vision and stuck in their petrol ways. Hyperloop and SpaceX and Gigafactory are all part of the transformation process of 21st century transportation.

GM had all the right ideas and media attention with the Volt. They made it too unlike a car and ugly styling and not willing to change their core businesses in an evolutionary way. The 2nd generation Volt was a slight improvement in appearance yet too late. They had a real opportunity and bumbled it until someone came along with a bolder vision for a cleaner and environmentally friendly future. Now GM lacks an identity for the future and hitching their wagon to semi-autonomous driving will not lead them to recapturing glory days. It all begins with a vehicle that buyers want to drive and excited about. Tesla's business model is a direct consequence of how petrol car companies do their business via dealerships. Tesla was forced to innovate around a difficult problem, and created a demand driven and word of mouth referral ordering process. It changes the game by putting the buyer first and what they want to drive, versus a build the car and hope they buy. I'll take an order backlog of 250k cars any time than worrying about how long a car can sit on a lot before it is sold (if it sits too long unsold, it means too much inventory is on hand and either price slashing or reduced production happens or both)

The iPhone forced competitors to adapt within 2-4 years. Microsoft ignored it and got in too late. Small devices are far easier to mass produce than cars. Tesla is the car industry's iPhone moment. It takes years to take root. It's going to take another 5-10 years for the auto industry to collectively respond with a network of their own, and by then the car and transit data Tesla has acquired will be the equivalent to what google has done with it's mapping infrastructure. Only Apple had the resources and capability for an alternative mapping infrastructure. Each passing day has Tesla more ready for 21st century transportation and no one else can be a worthy challenger without significant cost and investment to 'catch' up. By then, Tesla will be on version 14 or 15 of it's car operating system (current version i think is v9) when everyone else is trying to get their v1 or v2 ready for consumer acceptance.

As a car buyer seeing this continuity and innovation towards the future, a Tesla decision has potential to pay for itself many times safety-wise and eventually cost-wise for lowest cost of ownership per mile with each vehicle having a 300-500k+ mile capability (reduced need to replace an engine or dispose of gas powered car after only 65k-100k miles due to maintenance costs approaching value of car). Petrol car companies are still in denial and would love to see Tesla flame out like the Volt did. They forget the Amazon lesson and why it became one the most valuable companies in the world (hint: amazon was forced to innovate and create their infrastructure for eCommerce and cloud solutions, and now it is a major part of their growth engine in the variety of services it offers. IBM is left in the dust). Tesla's infrastructure is growing daily and is facing good problems from scaling up as a major smart-car transit player of the 21st century, while others are trying to scale down operations to the right product mix under a 20th century framework.