Thoughts on GM and Mexico.

[cmattj]

Now back to your regular scheduled program...
I'll just be over here in the corner shuffling my toe if you need me.

Hey your our wing-man so don't bow out. Geeze I didn't even want to dive into this topic, as I tried to just skim the top. On a serious note.. Do you think the BBQ place In KC has Lemon Drops.? see these are my true worries.

[Big Block Power]

And I think Matt, Dub and akro hit it too. It all comes down to profitability. In Mexico they don't have the Union's to deal with, nor the retirement programs, yet they can sell the product at the same inflated prices and increase bottomline profitability. I think that's it in a nutshell.

Well pal that’s been obvious since the 80’s . I wouldn’t think that’s news to anyone here? GM has been in Mexico since the 1930s.

Geeze where do you think a majority of GM parts are produced. You missed the bigger picture other than obvious overhead cost.

We need Mexico as much as they need us. Same as Canada. Not just for GM but for us as a strong economy with affordable goods. Ford has over 10 parts plants in Mexico as well . GM is just getting the ball rolling as it sees the future is changing.

Ha! Yes, as usual you are right! You guys are way more informed, intelligent and articulate for me to try to keep up. After rereading what I wrote I have come to a conclusion. If you want to see what it looks like when somebody talks out of his arse, just read my lat post!

Now back to your regular scheduled program...
I'll just be over here in the corner shuffling my toe if you need me.

And you just left me out of it completely. So I'm the one in the corner being ignored with my feelings hurt again. Yep Matt said it best this is not new news. Matt I have my helmet on in the corner too

[Tuscany]

On a serious note.. Do you think the BBQ place In KC has Lemon Drops.? see these are my true worries.

[Ytmsn]

I'm betting if they don't we can teach them!

[tgrace98]

The Number 1..... BIG three MFG car in China is..... Buick. Yes they absolutely love them and who could blame them .LOL

For those who may be curious where the current vehicle you own was made, take a look at the First Digit on your VIN Number. This will let you know the Country it was produced.

It may surprise you how many start with a 2 or 3

Number .Country

1,4,5 .United States
2 . Canada
3 .Mexico
J .Japan
K .Korea
S . UK
V .France, Spain
T . Switzerland
W .Germany
Y . Sweden/Findland
Z .Italy

Huh I never knew this. I checked both my Nissan Maxima and my wife's GMC Acadia and both start with a 1. So I guess I drive 2 american cars

[Tuscany]

I wont go to far as this is my Lifeline , and sure this could easily get political if all the shells are uncovered so ill touch on just a few.

So for starters have we forgotten that ford just reduced there cars to just a Mustang and a Focus this year? (fusions is on its way out) And Lincoln will be next to reduce the sedans as well. This will follow suite through all foreign and domestics Automakers as demand changes. So its not a surprise really is it??


So why GM Mexico? Well for one Cadillac was in the Tank in the early 2000. It was a North-star nightmare and CSI and sales where taking a dive. But low and behold..... The CTS was born and pumped life back into a brand that for ever had been a part of the American dream of the ultimate American Made luxury car.

Why is Mexico so important?? Well it had the newest of all the GM plants for one.. And It had the best paint and interior processes that technology could offer so it was fitting to build the infamous Escalade there right?? Maybe Since then other plants have improved with the latest Building procedures, and it was now becoming the same Quality across the board no matter where GM vehicles where built.

Whys doesn't Mexico GM just shut the doors and send the Vehicle building to the US?? Because its still the best Plant with the most current operation . America needs to be nice to its trade partners as that is what makes us "Merica" (ooops a shell almost came off). But that's just reality.

The Number 1..... BIG three MFG car in China is..... Buick. Yes they absolutely love them and who could blame them .LOL

For those who may be curious where the current vehicle you own was made, take a look at the First Digit on your VIN Number. This will let you know the Country it was produced.

It may surprise you how many start with a 2 or 3

Number .Country

1,4,5 .United States
2 . Canada
3 .Mexico
J .Japan
K .Korea
S . UK
V .France, Spain
T . Switzerland
W .Germany
Y . Sweden/Findland
Z .Italy

Thanks Matt, I remember a few years ago, 60 Minutes on CBS doing a feature on the new Chinese middle class. A Buick in China was THE car.. a status symbol. They must still be the hot ticket..

The Chinese middle class also loves seafood. Crab leg prices are dictated by the Chinese. Same with Lobster.

[sailor55330]

This is an interesting thread. My company recently moved all of the manufacturing to Mexico. Why? Simple--labor costs forced us to in the face of competition from China. Is it working? Well, sort of. We have been able to control our costs to some degree, but to be honest, we still aren't that competitive. Our products still have a fair degree of manual touch points when they are made, but automation is growing all the time. The sad truth is, we experience labor issues all the time--everything from unreliable workforce participation (don't show up) to just careless workmanship. We used to have 5 manufacturing facilities in the US, but foreign competition and labor rates/taxes forced the company to consolidate and relocate. It's a reality of business these days that I don't think we will overcome until we get past our pride of self-appointed self-value in the workforce. Again, as stated earlier, we have to some extent written our own destiny with unions and retirement programs that weren't sustainable in the long run---don't take that as judgement, it's just reality. As it was said earlier, there are an awful lot of people who think they will be millionaires by the time they are 30, but are still playing video games at 28. I saw this personally in someone I know. This person literally had a job in the trades with a salary of over $80k at 21 yrs old, but decided it wasn't enough and has now had multiple start up business fail in the quest for the "one hit wonder". I heard not to long ago that the next generation of millionares will actually come from the trades as those skill sets are being lost by those who have been told that without a college degree, they are useless to society, which has led to a false sense of entitlement. In 20 years, those who know how to perform the jobs that are considered "blue collar" today are going to have a good shot at writing their own ticket as they will likely be in high demand. I for one wish them well and encourage it.

Now, on the subject of American vs import cars, I have a unique perspective as I rent a lot of cars in business and as a result I have driven offerings from about every manufacturer out there. In my opinion, there is no better indicator of how a car holds up over time than being a rental car...they are driven hard by a variety of people who frankly don't care about them. I don't know if I have a favorite manufacturer, but I have a few that I really don't care for. Mechanically, I don't notice that much difference (some, yes), but where I do see the big differences is in how the interiors hold up....and it hurts me to say, but in most cases, US manufactured interiors don't seem to hold up as well over time--some are better than others, and I'll leave it at that.

This country has some hard decisions to make in the coming years and by default there is going to be a division....I hope we make the right choices for the country which may not always be the popular ones.

[Big Block Power]

For a number of years the Buick Lucerne was China's number one selling car. It's was a status symbol over there. It was like the caddy was over here. Not sure if it is still the number one or not though. But Buick still is.

Sailor you made some very valid points. Trades our techs can almost write their ticket now. We raised there wages twice this year and will prob do it 2 more times next year.

[AsLan7]

Without politics involved, I respectfully ask your opinion.

I don't get the investment in Mexico. It just opens old wounds and horrific PR...... (IMO here)..unless Mary Barra doesn't feel as strong about the stability and consistency of our workforce as we are made to believe. Personally, I think this is the root of the move.


Thoughts?

.
My two cents...

GM’s plant closings are just the beginning of what will be a very expensive and painful (but necessary) restructuring of the legacy automotive companies in the coming years.

This restructuring doesn’t happen overnight and will cost millions (if not billions) of dollars. Do it while times are good.

We are witnessing a technological revolution that has finally started to, not only equal, but surpass the remarkably inefficient gas engine (& driver) that has so dominated both the consumer and commercial vehicle market since the invention of the automobile.

Similar to how the internet and the IPod revolutionized the album shopping experience, record stores, and the music industry by unbundling the single from the Artist’s entire album using music downloads while making tape & CD players obsolete, we will see the same reshaping of the auto industry in the next 3-10 years—but on a much larger scale. Those companies who recognize this future will do what is necessary to retool their infrastructure. Those who do not...well think Sears, Kodak and Tower Records in the digital age.

The change is coming folks. Label and record industries didn’t want the unbundling change to happen but were ultimately powerless to stop it. Why—consumer desire for the superior product at a better price.

This restructuring change is right around the corner in the consumer and commercial automobile market. Change or die. It’s painful & VERY expensive—but necessary to be a world player in the years to come. Honda & GM see it. Mercedes & VW AG (VW, Porsche, Audi, Bugatti) do too. I’m not sure Chrysler-Fiat does. Ford-remains to be seen.


From NBC news...
“GM has other reasons for the planned plant closures and job cuts. It wants to shed money-losing operations to free up capital that can be used to fund its costly push into new areas, notably electrified and autonomous vehicles. While such technologies are expected to be crucial to the industry by 2030, they are seen as vast money pits for the near- to mid-term. That’s one of the reasons why GM has inked two alliances with its erstwhile Japanese rival, Honda, which has agreed to invest billions of its own on joint efforts to build green and self-driving vehicles.”
https://www.nbcnews.com/business/autos/ ... et-n945156


From Reuters...
“Volkswagen AG (VOW) announced Tuesday that it will stop developing gas-powered cars after 2026, according to Reuters, to focus entirely on electric vehicles. "In the year 2026 will be the last product start on a combustion engine platform," VW strategy chief Michael Jost said during a speech at an automotive conference in Germany, Reuters reported. The move is a radical step for the best-selling passenger-car brand in Europe and China, but Jost said the company is committed to taking steps to stop global warming.”
https://apple.news/A_XUAMKeLRa6Ft5LVJFttWQ


CNN & 60 minutes on Sunday...
”In his 60 Minutes interview, Musk also floated the possibility that Tesla may expand its footprint in the United States. He said Tesla "would be interested" in taking over some of the factory space GM said it will abandon during its restructuring.
The company's current assembly site in Fremont, California, also has a history with GM. The plant was jointly operated by GM and Toyota before Tesla took over in 2010.“
https://apple.news/A5yw4L8zuSiqu9XYJhWs7sg


The Chinese are positioning themselves well....
https://www.roadandtrack.com/new-cars/f ... rburgring/


Battery and autonomous driving technology is growing exponentially. The future is exciting. I’m envious of what my kids will be driving someday. In the meantime, we will be driving our combustion engine technology vehicles which will quickly become collector pieces for our grandkids...like my Sony CD or JVC VHS/DVD players.

Again, just my two cents. Cheers.

.

.

[Ytmsn]

An interesting perspective A7. Here is something that I can add to the conversation with...

I've been a car Auctioneer in the wholesale auto industry and collector car market for 30 years. Most of the vehicles I see coming through the lane are everyday drivers. I've sold everything from new vehicles with just a few hundred miles to vehicles with several hundred thousand miles.

Two things that stand out in my career. The first is the drastic drop in value when you buy a new vehicle. The more money you spend on one, the more it seems to depreciate when you make the deal at the dealership. For years people said if you drive it off the lot it will drop, but you don't have to drive it anywhere. The vehicle simply has to go from an MSO to a title and it becomes used and will typically drop 20% to 30% right off the bat. That $84k truck that Tusc mentioned can be bought wholesale 3 to 6 months later for $50k.

Drive it for a few weeks or months, depending on what it is, and it may drop another 10 to 20%. After a year or so, its wholesale/retail value will be close in matching to its age, so if you buy it right (wholesale) you can drive it for another year or two, then resell at even, or with just a tad of profit/depreciation. So that's why I never buy new, but always a clean, low mile one-owner thats a year or two old.

Now with the late model vehicles, prices are ridiculously high. Foreign luxury like Mercedes and BMW are the best examples of depreciation. I've sold thousands of both brands, and at 4 or 5 years old they are 25% or less of the original sticker price. Add another 5 years and now you can buy that $100,000 ride for 2 to 5 grand, depending on miles and condition.

Teslas are the new kid on the block. In the last month or so I've had 6 come through my lane and haven't sold one yet. In fact, I haven't had a bid on any of them. The market just isnt there. They are still priced in the 60's or 70's, and the wholesalers can't absorb that. Why buy a car for $60,000, pay interest on the floor, and hope to sell it within 30 days for a profit, when you can buy 2 or 3 vehicles with the same money that are good sellers with a higher margins? So the value of a high end unit has to come down to the market, because the market is not going to come up to the price on something depreciating everyday. And a vehicle that is largely electronic will drop like a rock, but as with anything, if you "drive it till the wheels fall off" you can get your moneys worth, sort of. It depends on the maintenance costs, and battery cars can get expensive.

The wholesale auto industry has changed quite a bit over the last 15 years. It used to be that when a car got close to 80,000 miles it was time to trade. Then it hit 100,000. And now its 200,000 to 250,000 miles. And we're starting to see a lot of 300,000 mile stuff. Especially in big trucks with diesels. Everytime I sell one I'm thinking "Where do they go with that?" Those big diesels can go and go, and they will hold their value much longer than anything out there. The smaller diesel vehicles are starting to catch on, but haven't gained in value yet like the big trucks.

People are hanging onto their cars longer and longer, and because of the high prices, financing has been stretched out to 7 years to get the payment down to a manageable level. It doesn't take long to get upside down and floating to the top. A lot of folks default, and then can only secure financing from a note lot. Buy Here, Pay Here. And note buyers dont buy high end stuff... So the buyer pool for high end vehicles vanishes, and the prices plummet. Now the wholesale market is being set buy the big note lots, like CarMax, Drivetime, etc. Those guys go head to head all the time.

The value/ratio/wholesale/retail market is changing faster than it ever has...

The second thing I have been noticing more and more is what kind of vehicles that folks are holding onto the longest. There are a few late model cars that you rarely see come across the block, and when you do it is usually used up, but not always. Sometimes I can buy one and flip it for a good margin.

But I'm noticing a lot of stuff isn't there anymore. Vehicles I used to buy on a regular basis are now sky high, if you can find one. Toyota Land Cruisers from the 80s and Land Rover Range Rovers from the mid 90s are the best examples. The "Cash for Clunkers" program took a HUGE segment out of the industry and changed the market drastically. Many of those "clunkers" are now collectors and very hard to find.

And lastly, the collector car market will continue to climb. What we consider a classic is getting younger all the time. I never did care much for just about any car built in the 80's, but those cars are bringing crazy prices! And now cars from the 90's are going for a premium because the kids that grew up with them are becoming the largest buyer pool now, and buying what they know. Just like the market for the original stuff from the 20s, 30s and 40s has diminished, because the guys that grew up with those cars are going away every day in huge numbers. Resto mods are still.strong, but probably won't be for much longer.

None of this has to do with the original topic, but hopefully will give you a glimpse into my wholesale auto world.

[AsLan7]

.
Great stuff YT. I always appreciate your perspective—especially coming from your line of work.

Totally ageee with ya on purchasing new. As Jay Leno used to say, “You didn’t pay too much, you just bought it too soon.”

It’s been over 15 years since we bought a new family car (or boat). Let someone else take that massive depreciation hit. Of course with my vocation, I’m in a unique position to find and inspect used vehicles for sale in areas of the country where they are the least desired (or at least not in demand). Makes for great purchasing opportunities.

The consumer electric car market is on the verge of going nuts in the near future. I totally understand why certain model used Tesla’s are not selling (yet). It’s a combination of factors —but that’s a discussion for another time. I will leave you with this quote from Porsche NA Chief Executive Klaus Zellmer from the LA Auto show ...
“The demand for electric cars is still a bit sleepy. But once people start driving electric cars, they will realize there is a lot of potential. The acceleration is breathtaking. They’re not producing any noise. You can feel good about not emitting anything.”

I’ll also mention that of all the vehicles we have ever owned (which are quite a few), our Tesla is by far the most fun and the most popular in the family—of all time. All five of us constantly want to drive it. It’s easy, fun, and technologically light years ahead of any car being mass produced on the market from 2018 or earlier. It still has a ways to go in certain areas but anything else we drive (that is presently on the road) seems archaic. It’s currently the safest (5 star CR rated) and quickest (0-60 in 2.2 sec) production car on the planet. I only pay for tires and drive the crap out of it—because it’s so fun!

Make no mistake about it, electric autonomous vehicles are coming and coming fast. The automakers are waking up to that reality. These machines will be flooding the market before you know it. Just look at what’s center stage at the LA Auto show right now....

https://amp.usatoday.com/amp/2127742002

https://www.usatoday.com/story/money/ca ... 159557002/


I embrace technology when it makes my life easier. The auto industry will either 1) embrace the change and commit to the painful restructuring; (like GM); 2) find a niche for themselves (think ChrisCraft when it resisted moving from wood to fiberglass...https://www.proboat.com/2012/01/wood-to-glass/ ) or; 3) worse yet, fade away for failure to change. (Blockbuster, Pan Am).

Now if I can just get this Netflix DVD back in the mail.
.

[Tuscany]

This is an interesting thread. My company recently moved all of the manufacturing to Mexico. Why? Simple--labor costs forced us to in the face of competition from China. Is it working? Well, sort of. We have been able to control our costs to some degree, but to be honest, we still aren't that competitive. Our products still have a fair degree of manual touch points when they are made, but automation is growing all the time. The sad truth is, we experience labor issues all the time--everything from unreliable workforce participation (don't show up) to just careless workmanship. We used to have 5 manufacturing facilities in the US, but foreign competition and labor rates/taxes forced the company to consolidate and relocate. It's a reality of business these days that I don't think we will overcome until we get past our pride of self-appointed self-value in the workforce. Again, as stated earlier, we have to some extent written our own destiny with unions and retirement programs that weren't sustainable in the long run---don't take that as judgement, it's just reality. As it was said earlier, there are an awful lot of people who think they will be millionaires by the time they are 30, but are still playing video games at 28. I saw this personally in someone I know. This person literally had a job in the trades with a salary of over $80k at 21 yrs old, but decided it wasn't enough and has now had multiple start up business fail in the quest for the "one hit wonder". I heard not to long ago that the next generation of millionares will actually come from the trades as those skill sets are being lost by those who have been told that without a college degree, they are useless to society, which has led to a false sense of entitlement. In 20 years, those who know how to perform the jobs that are considered "blue collar" today are going to have a good shot at writing their own ticket as they will likely be in high demand. I for one wish them well and encourage it.

Now, on the subject of American vs import cars, I have a unique perspective as I rent a lot of cars in business and as a result I have driven offerings from about every manufacturer out there. In my opinion, there is no better indicator of how a car holds up over time than being a rental car...they are driven hard by a variety of people who frankly don't care about them. I don't know if I have a favorite manufacturer, but I have a few that I really don't care for. Mechanically, I don't notice that much difference (some, yes), but where I do see the big differences is in how the interiors hold up....and it hurts me to say, but in most cases, US manufactured interiors don't seem to hold up as well over time--some are better than others, and I'll leave it at that.

This country has some hard decisions to make in the coming years and by default there is going to be a division....I hope we make the right choices for the country which may not always be the popular ones.

Awesome post.
Consider what’s changing with work ethic we should be passing down, and then let’s look 20 years ahead....I guess it doesn’t take a crystal ball to see. GM has a clear view of future unbearable costs while doing business in the United States. Moreover, not only has work ethic changed, but so has the go to work attitude that built this country. “Hey, I’m not here to work, I’m just here for the paycheck”

I can drone on about insurances, taxes, yada, yada, but at some point, tough decisions become very easy. I feel bad for the old schoolers losing their jobs. They don’t deserve this...but I guess in the famous words of William Muny “deserves got nuthin to do with it” GM’s future..building/planning towards the next generation work force, combined with this countries two headed monster, off the charts crazy leadership? I get it Mary Barra...

[Big Block Power]

The next 10 years are going to be very expensive for these auto groups. VW and Ford are working on a deal right now to combine knowledge and research for the EV. VW wants to be completely Electric by 2026.
GM and Honda are working together for the same goal but realistic goal may be 2030. 60 minutes had Elon Musk on and he is way ahead right now and he knows what the costs are and it almost broke him. It's going to be interesting in the next 10 years. We at the dealerships are going to have our work cut out for us as well.

[cmattj]

Change is scary isn’t it?

We like , and hate the feeling all in one thought. These moments in all industries have came, and passed as will these changes that appear to effect so many people.

Will we see the next big growth in this EV arena? Possibly . What was once the MFG trick in reaching the requirements of fuel mpg by having hybrids in the mean of models produced , has now become a need for the consumer.

All great points here. From the used market becoming stronger and classics becoming scarce. (Yes people fix up Novas now. ) lol

Silly GM Used to think having a Camaro, and a Firebird was essential . Sounds crazy now doesn’t it. See it’s just painful to watch Change.

And yes GM and Honda are back at it ( Yes they did Saturn together years ago) . Will the Tesla set the Bar for a Slick EV?? It’s going to be fun and I will like, and hate it with all of you.

[Big Block Power]

I like how China is pushing EV. This could really help our world as well. We will be buying their EV soon. I remember the Olympics how much smog was over their. This can only help.