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The Pennies in the Business

The GM ignition switch issue, is a blunt reminder that although the product is thousands of dollars, often the pennies command the product.

We quickly forget or overlook that in the under belly of this business there is an unglamorous aspect that is driven by pennies.

For some reason the Pinto gas tank of a few decades ago comes to mind. Back then too it was probably pennies to solve the problem. Interesting how things have a tendency to come back and resurface. 

In an age of social media with an increased level of transparency, reinforced by e-mail strings which often show the apparent facts, can be treated as a "smoking gun" and in most cases get sucked in the "ether" of corporate e-mails that get lost on a server.

It boils down to "Who will make a decision to spend hundreds of thousands of dollars to solve a problem" lets go a step further "Who will put their ass on the line", lets go another step "Who will jeopardise the well being of their family, and mortgage payments to do the right thing".

On a wider scope, we are increasingly seeing common platforms, common components, global sourcing, slicing and dicing pennies; which can create problems and issues that cost millions.

Think about this in some meeting somewhere: "You know we saved half a penny here, a quarter penny there, and another quarter penny over there, for a total of one penny over 1.5 million units for a saving of $15,000 looked real good on the spreadsheet"...then we had to recall a million of them at a cost of $100. each".

In the business we always read about the manufacturer that found ways to save even more money, source from all over the planet, lower the price, and sell a model like crazy. That particular model that sells like crazy, has got "cost savings" plastered all over the vehicle, with parts coming from all over the planet where labor is cheap. It becomes an inexpensive globally sourced platform, that can be embellished with "touch point" features to increase the price and profitability.

Then with about 25,000 kms on the model the comment "This vehicle is pretty loose for only 25,000 kms...gotta wonder what will happen in another 25,000"...."Funny its showing accelerated wear and tear"..."Surely the life expectancy of the components has been finely calibrated to exceed the warranty time frame". 

Think about this 100 years ago, Henry Ford started a revolution by paying assembly line workers $5.00 a day (double the going rate).


Canadian Sales First Quarter 2014

Our thoughts on Canadian Sales for the First Quarter of 2014. 






General Motors

If you have been involved in this business for a few decades you perhaps read "My Years with General Motors" by Alfred P. Sloan, are aware that Peter Drucker used GM as a management model, and perhaps even remember the golden years of GM. 

You probably also remember the GM of the mid 1970's and onward...

If you are a little younger, this is a succinct review of GM, and its decline...






Joy of Jaguar

Enjoy..."Whole bunch of money and a whole bunch of time"...



Vroom Room

Good Morning!

DeuceIts Friday, its the Vroom Room, come in make yourself comfortable, enjoy the cappuccino and biscotti, join the conversation, leave a comment.

Is Spring finally in the air?

A statement by Peter Drucker...

The educated person will therefore have to be prepared to live and work simultaneously in two cultures--that of the "intellectual," who focuses on words and ideas, and that of the "manager," who focuses on people and work.

A statement by Phillip Roth...

The young especially live according to beliefs that are thought up for them by the society's most unthinking people and by the businesses least impeded by innocent ends. Ingeniously as their parents and teachers may attempt to protect the young from being drawn, to their detriment, into the moronic amusement park that is now universal, the preponderance of the power is not with them.

We urge you to reflect on these 2 statements, especially if you are in the auto business. While taking a monent to connect a few dots that capture your attention.

It will be informative and fascinating to see how the GM ignition switch investigation, debacle develops in the coming weeks. The opening round this week was perhaps as expected with the anticipated posturing from all concerned. At some point additional transparency will be shed on "modifying a part, not changing the part number" mystery.

Talking of GM, the product is dramatically better that the sales numbers indicate in Canada. It remains a mystery (you think) as to why GM is not selling more. One gets the feeling that GM refuses to double down, start selling, start winning. Go figure, and yes we could keep on going...

Canadian Sales:

A good March comparable to previous years, and a strong first quarter. As expected some manufacturers gained sales, while others faltered, fair to say that most throttle up in March to arrive at a satisfactory first quarter. Its been a "rugged winter" while keeping in mind that most folks use the Internet which is not affected by climatic conditions.

Our usual old race cars from the Goodwood Members Meeting.