GM announcement Signals lower prices for GM vehicles this year in a price war sure to help consumers.Toyota may have spoken too soon by predicting they will take the No. 1 spot from GM in terms of cars sold per year. The current CEO of General Motors, Rick Wagoner, stated the title will not go down without a huge fight:
"I like being No. 1, and I think our people take pride in it." He continued to a small group of reporters at GM's main headquarters. "It's not something we're going to sit back and let somebody else pass us by.
Current Situation:
GM sold 9.2 million vehicles in 2006. Toyota announced the plan to produce 9.6 million vehicles in 2008. If current trends for GM sales hold, and Toyota sells every single vehicle they plan to produce, the title for GM will fall.
Toyota's Big Gamble:
Toyota is placing a lot of eggs in the Toyota Tundra basket. We have seen time and again highly rated cars in sales flops because they do not resonate with the average car buyer. However the new 2008 Tundra is very impressive and sleek. However, the design may be a little too effeminate for the average truck buyer - it lacks testosterone in the design with the curvy edges and flamboyant doors. I think it will be a Honda Ridgeline II - highly rated but a flop in sales.
GM Strategy:
Build more cars. The GM CEO stated that they have the ability to increase production beyond Toyota. In that case, with supply possibly outpacing demand, prices will fall for GM vehicles in 2008. It is also not clear yet what vehicles will be produced in droves. It is also not clear on how this will mesh with GM's highly publicized strategy to build quality products so they rely less on selling cars and trucks with huge incentives.
Basically GM is going for the long term win. They want the word of mouth reputation of building top quality cars - even if they change a little more. But they also want to hold on to the claim of being the world's No. 1 automaker.
My prediction:
They will build quality cars, but in order to combat Toyota they will use incentives and rebates and lower prices to keep the volume up even if they are not hugely profitable in 2008. The GM line looks like a good deal for 2008 - I'll keep you posted. Let me know your thoughts -- please post your comments below!
RockSolidWes