Big Advice for GM's Small Cars

November 27, 2000

To: Ron Zarrella
General Motors North America

Dear Ron,

It would help if we talked about your plans before you pushed ahead. As it is this advice comes late, and you probably won’t like to hear it but:

Your plans for a small car revival are fatally flawed.

You have said GM will:

  • Build a small Chevy pickup truck with the help of Isuzu;
  • Build a small "crossover" Chevy with help from Suzuki;
  • Build a new Cavalier with help from Opel including the Delta platform used by Opel;
  • Build a new small Saturn with the Delta platform used by Opel;
  • Build a "crossover" for Pontiac with help from Toyota.

Ron, think back on all the advice I’ve given you. How much has been right, and how much has been wrong?

Ron, you can build those vehicles, but if you want them to succeed, get rid of the help from Isuzu, from Suzuki, from Opel and from Toyota.

Ron, you have depended on these people before and what happened?

Strike 1: You built your minivan (the Chevy Venture plus Pontiac and Olds versions) with help from Opel. What happened? It came out too small. Your minivans, sold through all three dealer groups, are outsold by Ford’s Windstar alone, and don’t challenge Chrysler. And then the Germans who made you make it too small wouldn’t take it.

Strike 2: You used the German platform to do the Saturn L, a disaster, in fact, one of the greatest new model flops ever. My guess is you lost $500 million on that mess.

Strike 3: Suzuki and the joint venture CAMI plant in Canada. It has always lost money and you are killing the Chevy Metro cars you build there. The Chevy Tracker built there, and the Chevy Prizm cars built by Toyota, have never been major successes.

How many failures does it take?

Chevy has been designing great trucks forever. Chevy has designed great cars. Just fire those focus groups and let the design team go for broke. Isuzu is a nice little company but in financial trouble. Why let the failures tell you where to go?

Suzuki is a nice little company making nice little vehicles that sell very well in India and places like that. Why would you let them stick their fingers in your crossover? They don’t know what a crossover is!

Working with Opel on common platforms has turned out so badly in the past that you shouldn’t even think about it. Aren’t the minivan and the Saturn lessons enough?

And Toyota’s cars work well for Toyota, but not for you.

When we buy GM cars, we want GM cars, Detroit steel, American looks, not half-baked compromises.

You will say that you are saving money. No, you are losing money. You lose money on the Saturn. You lose money on the Suzukis, and I don’t think you make money on Prizms. The minivans should make money, but they would do a lot better if they were more popular, which they would have been if you hadn’t taken the German Opel advice on how to design them.

You make money by selling hot vehicles that the buyers have to have, and frankly, I can’t imagine buyers going wild to get vehicles from compromise designs with Isuzu, Suzuki, Opel and Toyota.

You might say that it’s too late to change your plans. It’s never too late to avoid disaster. Remember the Saturn L.

Your friend,
Jerry Flint

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