Can Pontiac Compete?
Can we compete?
Competition is a complex matter. It is a combination of
customer satisfaction, product quality, innovative design,
sales volume and profitability. A car company without all five
ultimately cannot exist. Interestingly the old Pontiac was
likely missing all five and thus found itself cast aside.
The financial factors
As demonstrated on the “About Pontiac” page the Pontiac
brand has an ability to create adequate sales volume. If, in a
normal economy, Pontiac can sell at least 200,000 cars
(history would say that it can) that represents, using GM’s
average pricing, almost $5 billion in revenue. We believe
that this revenue stream is adequate to maintain the
Company. The second financial measure is profitability.
GM’s cost of manufacturing in 2008 was 101.5% of revenue.
In other words every car was a loss when it came off the line.
This can be contrasted with Honda Motors which is able to
manage to a 75% cost of manufacturing or a 25% gross
margin. Knowing the worst and the best provides
boundaries in which a company can properly operate. To
contrast, Ford and Toyota operate in the 15% to 19% gross
margin area. A focused workforce without bureaucratic
oversight should be able to achieve 12% gross margin
within two years. That would leave about $600 million for all
other costs. Profitability within 2 years!
The last three factors of competitiveness are all customer
related. Using some paraphrasing from the long forgotten
Saturn mission and core beliefs, if they are lived, we believe
will achieve the desired customer satisfaction and
extraordinary brand loyalty:
Mission: To market vehicles developed and manufactured in
the Untied States that are world leaders in quality, cost, and
customer satisfaction through integration of people,
technology and business systems.
Guiding Philosophy: We, the Pontiac team, believe that
meeting the needs of customers, the Pontiac members,
suppliers, dealers and neighbors is fundamental to
achieving our goal.
Great customer belief in the brand and Profitable…Pontiac
will be competitive.