Fleet News

GM executive questions block exemption plans

General Motors Europe president Mike Burns said it was unlikely that new cars would ever be sold alongside washing machines in supermarkets.

Asked at the Geneva Motor Show whether he thought potential changes to the block exemption regulations meant new Vectras could eventually be sold in supermarkets, Burns replied: 'Obviously you can never say never in this business but buying a car is a lot different than buying a television or a washing machine.

'You don't get in those things and drive them and put you and your family's life at risk. 'Safety is an issue, serviceability is an issue. I think it's impractical - I mean, do you see a day when supermarkets sell houses? It is akin to a house, I don't think these things will happen.'

Commenting on his view on proposed changes to the car distribution system put forward by the European Commission, Burns said: 'It will be interesting to see how it ultimately plays out. If what happens is what is predicted now then I don't know if they got the job done. I don't know if they have improved a lot or not.

'There are a lot of issues where I don't think the customer has won. What you also have to consider is that this business is a zero-sum game, and if the businesses are not making money, they can't go on for very long.'

Burns said many manufacturers do not operate as strong export businesses 'where they are selling into a strong dollar'. He questioned whether the Commission's proposals are 'sustainable' and 'does the customer ultimately win'.

'The one good thing about it,' he continued, 'is that everybody is faced with the same situation, so the one who figures out the best strategy is the one who ultimately wins.

'But that's only true if the customer wins. We have very sophisticated vehicles, from a service standpoint. 'Not everybody is able to walk in and service a vehicle today. It isn't that people can't be trained, it's how quickly they can be trained and how quickly you can develop that expertise.'

On the Commission's criticism of manufacturers for having different pre-tax prices across Europe, Burns said: 'I still see reports about wild pricing differences, but it isn't real.

'We have done the analysis and the only way you can look at these is at the true net transaction price. You cannot look at the window sticker price.

'If you look at it from a net transaction price then those 'wild things' are not so wild. If the tax harmonisation issue is addressed then maybe we get a little more realistic with regard to the service aspect and the dealer aspect - maybe it will work. It is not a foregone conclusion to me that this is in the best interest of the customer.'

Commenting on a natural link between sales and service at dealerships, Burns said: 'The way it's written, and this is just an interpretation, somebody can get certified and can then open up multiple service points. The question is - what is the certification and how good is it?

'If I have got a heart problem, where do I want to go? I want to go the guy who works on hearts five times a day. I want experience.'

He said small dealers operating in rural areas face the biggest threat from changes made to block exemption by the European Commission.

'Those dealers could find someone coming in who has made no investment, but who sets up in their area. Maybe it's a dealer from Denmark who sells vehicles at a price he can buy them from in his own country. It is a zero sum game and there is a perception that vehicle manufacturers are making lots of money - it is not the case. We'll have to see what happens.'

Burns also said that General Motors Europe's radical top to bottom study, called project Olympia, created to return the company to profitability, was 'on track'.

'We are well into the implementation, but we don't have prescribed stages,' he said.' 'Olympia has two parts - a cost part and a revenue part, revenue is the profit part of it.

'This business has negative pricing and that is going to last for some time. The only people who will survive are those constantly take the cost down in excess of their economics.

'This issue of getting better every year and exceeding your economics is something we all have to get used to. The days of being able to add two or three per cent on price to cover inefficiencies or economics are over.

'The good thing about Olympia is that it has the breadth, the depth and the ability to deal with the challenges in front of us. This is not a short-term issue, it has the capability of taking us way out into the future,' he added.

Burns also confirmed the Concept M vehicle shown at Geneva would go into production. The mini-MPV sits between Corsa and Zafira in size and in concept mode it featured a 150bhp 1.6-litre turbocharged engine powered by compressed natural gas, linked to an Easytronic automated manual transmission.

'History tells you the way we're approaching this, with most of our concept cars we have every intent of taking them to production. We don't do them for fun.'

He declined to say when the Concept M would be launched, but said it should be expected in the 'near term'.

'The M Concept is likely to end up in the Corsa facility as a flex plant,' he said. 'In fact, our strategy is to flex. This is because as you get a decay in a product cycle you get a new one coming on. It means you can run plants at a much higher capacity.

'Other people recognise this too - it is key for business. Anybody who says they're going to build a dedicated plant and doesn't have the ability to flex, well, I wish them good luck.'

Burns also revealed exciting new plans for Saab.

'We are investing heavily in Saab's product line-up. You will start to see from the summer new product - virtually on a nine-month basis for some time.'

Commenting on GM's decision to postpone plans to bring Saab and Cadillac together in Europe (Fleet News Europe, January/February 2002) Burns said: 'It was new product versus taking Cadillac into Saab's distribution network and anyone would choose new product.'

Burns said the new product line-up would take Saab into new areas citing the 93x as the 'perfect example of this'.

'It's an area Saab never played in, and it is an area that is hot, not just in Europe, but also in other parts of the world,' he said.

 

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