Kappa II Platform Axed From R&D [merged]

[cerberus]

A couple of thoughts stumble to mind...

The 27,000 -> 2.7B line is not working for me. I'd look for raw profit or loss per unit shipped. So, invoice price, less shipping, less direct manufacturing costs, less materials, blah blah blah. Per unit, you may find a small profit or small loss. Don't know. Now add in all the one time charges, as mentioned by a few. R&D, tooling costs, etc, and spread that across units shipped. Now you may be talking a loss across the total units sold set. Add in warranty costs, too, btw. A "couple" of diffs, and a "handful" of 3k tops...

If we go back to the original statement at GMI, which is just another enthusiasts forum like us, the statement is fuzzy.

GMI has been told that when the Pontiac Solstice and Saturn Sky
came to the market, GM was losing around $10,000 per unit built

Ok, what's that mean? We remember that there were delays in initial production as they worked out kinks and really worked and reworked the details prior to shipping. So, we talking about just the few months of production? Wouldn't make sense to average in all your one time charges against that though, so I'd suspect perhaps we're talking all the Q/A and rework the initial Kappas went through. You guys remember all the stories of cars being pulled off of the train cause they weren't right? And that was early Sky production, well into the Solstice run. Same for the RL/GXP really. The shutdown and I/C rework? This stuff no doubt added up. Yet, still two problems with the 10,000 number. If that's just a small period of time at startup, big whoop. What's the profit or loss of cars built today. And of course, how long will the run go? To the end of the contract at DE? At this point GM should be able to forecast what the total run will come out to in a profit/loss context. Starting up Kappa II may not add up, but extending Kappa's? Depends on how the numbers work, but looking back to the original statement, I highly doubt it's 10,000 per unit today.

[IKenn]

Originally Posted by RedHeaded RedLine

When a teacher with a masters degree & 9 years experience makes $16/hour, a cleaning man with no skills should not make more than minimum wage. –Joyce

My daughter-in-law is an EXCELLENT 2nd grade teacher 6 year experience 30yrs old ,drives a Lexus and has a 200k home my son makes a little less cause he's in a JUST WORLD as an elevator repairman hangs out in elevator shafts and rescues people stuck in elevators at the airport but doesn't make her salary his skills were on the job trained,and supplied my his company
FYI; Weather your skills are taught at a college or on the job their STILL SKILLS LEARNED to preform the task at hand were retrained every 6mo on NEW Things . My D-In-law doesn't go back to college when she's OFF SCHOOL FOR 3MO during the summer to up date skills
OH and if it makes a difference our GM cleaning people or as we call them in the plant Labor Maintaince are skilled and highly trained with college credited courses too!! Pm me if you want more info of course respectfully
These folks have been in the factory for 25-30 years working on different platforms just like the Kappa one halted R&D wondering what would happen if the plant closed and they were forced to move and hoping to gain another product that would gain market demand GM must remain flexible on new products to keep up with the ever growing competition AKA ;Toyota ,Ford ,Dodge and fuel choices E-85,Hybrid,Hydrogen
I know I was from a closed plant forced to move 1200 miles from family to keep my job at the time a single mom of two
So my Prayers and thoughts go out to the hard working workforce at the Willmington , Del Plant to stay open . I KNOW FIRST HAND trust me.

[lorennerol]

Originally Posted by RedHeaded RedLine

When a teacher with a masters degree & 9 years experience makes $16/hour, a cleaning man with no skills should not make more than minimum wage. –Joyce

The woman is wise and thoughtful, though I'd add that HAZMAT certification is not a 'no-skills' position, nor would I call such a person a janitor.

And in the end, it doesn't matter what any first-world citizen would take to do this job, does it? It really a matter of what a subsistence farmer in China or Mexico or the like would take.

Shipping is cheap and the dollar is down. We're seeing a *global* equalization of the standard of living. Some coming up, some going down. We're just on the wrong end of deficit spending, which puts us squarely on the end of the teeter-totter that's descending.

I've had more big (the check engine light came on today) and small issues with my Sky in the first year than I've had owning three Toyotas over the last ten years. Had the Sky compared in build quality to my two 4Runners or my Sienna, I'd be looking to buy an Outlook. It doesn't, so I'm looking to buy another Sienna or a Honda Odyssey. It's a significant lost opportunity for GM to to capitalize on the halo effect of the Kappas (not just me, but everyone who came over from owning only foreign cars to get a Kappa).

I'd much rather buy a Ford, GM, or Chrysler product, but I'm not interested in the headaches that come with them (owned two Monte Carlos, a Jeep CJ, and the Fiero in the past). I have the Sky initially because I hoped things had changed, and now because it's just worth the headaches.

The Big 3 have to figure out how to build great quality vehicles that are price and feature competitive with Toyota and Honda. They also need halo vehicles to bring people back in (especially now that giant trucks don't fill this need). Honda and Toyota don't because they have big, loyal owner bases and have turned off very few. Until then, the Big 3 will be forever stuck in the same loop they've been in since the oil embargo in the 70s. And this isn't just about where the cars are built- Toyata builds a lot of Camrys in the US. Engineering is a big, big part of the equation.

L

[L32togo]

I noticed that there is no information source given regarding $10,000 loss per unit. I will believe it when I see some concrete information.

If it's true, then fellas, we are all driving a bargain. Thanks for building it, Bob. If it's going to be one of a kind, I am happy to have been part of it all, a sweet car like that comes around only once in a lifetime.

When Japanese build a sweet car like that, I will buy it. But it won't happen. We have all seen the examples of what they can do.

[Booster_RL]

Originally Posted by EndiSky

Still reading through it, but they are saying that each Kappa loses GM $10,000 PER CAR. With 100,000 Kappas out there that would mean that GM has LOST $10 BIIILLLIIION.

I call Shenanigens.

Aaaaaaah! Exactly. Though you are exaggerating (only by 1 zero though) the number is actually US $1 Billion in loss.

100000 x 10000 = 1,000,000,000

I do not know if this rumor is true or not, but that is quite a bit of money to throw out the window for a 2 vehicle platform either way. Seems a bit ridiculous but then of course GM is headed down a very dinosaur path at the moment so who knows.

If this does prove to be true then you possibly just got yourself a nice collector's car without even knowing it.

The last Mazda RX-7 had at least as many problems as any Kappa ever has and you could still sell it for much more than its original value if it had fairly low mileage after it was no longer in production. As an investment though--> Buy a house in a non-tanking area.
But since we own the car already it may pan out for us.

[L32togo]

I read the entire 13 pages of that post. The unbelievable ignorance and negativity led me to make a couple posts myself. It seemed that the post attracted every troll there is. They were bashing not only Kappas but all GM products, engineers, management. And that is supposed to be a GM enthusiast forum?

[cerberus]

Originally Posted by L32togo

I read the entire 13 pages of that post. The unbelievable ignorance and negativity led me to make a couple posts myself. It seemed that the post attracted every troll there is. They were bashing not only Kappas but all GM products, engineers, management. And that is supposed to be a GM enthusiast forum?

Yeah, well, at least you didn't mistake it for a GM site, as some sometimes are lead to believe. Bottom line, I'd say the 10,000 number is pure bumkus until substantiated and the General's gonna do what the General's got to do. Some positive enthusiasts support may not hurt though. I'd rather not go down the GMI road and backseat drive GM's planning and position and get negative.

[RedHeaded RedLine]

Originally Posted by IKenn

My daughter-in-law is an EXCELLENT 2nd grade teacher 6 year experience 30yrs old ,drives a Lexus and has a 200k home my son makes a little less cause he's in a JUST WORLD as an elevator repairman hangs out in elevator shafts and rescues people stuck in elevators at the airport but doesn't make her salary his skills were on the job trained,and supplied my his company
FYI; Weather your skills are taught at a college or on the job their STILL SKILLS LEARNED to preform the task at hand were retrained every 6mo on NEW Things . My D-In-law doesn't go back to college when she's OFF SCHOOL FOR 3MO during the summer to up date skills
OH and if it makes a difference our GM cleaning people or as we call them in the plant Labor Maintaince are skilled and highly trained with college credited courses too!! Pm me if you want more info of course respectfully
These folks have been in the factory for 25-30 years working on different platforms just like the Kappa one halted R&D wondering what would happen if the plant closed and they were forced to move and hoping to gain another product that would gain market demand GM must remain flexible on new products to keep up with the ever growing competition AKA ;Toyota ,Ford ,Dodge and fuel choices E-85,Hybrid,Hydrogen
I know I was from a closed plant forced to move 1200 miles from family to keep my job at the time a single mom of two
So my Prayers and thoughts go out to the hard working workforce at the Willmington , Del Plant to stay open . I KNOW FIRST HAND trust me.

I wouldn’t have put a skilled technician in the same category as a clean-up man. Elevator men need to be proficient in many skills, technologically current and often take life compromising actions. I would not begrudge them a penny. I do have to accrue 48 continuing Ed credits every 5 years to maintain my certification. I think as a society we have our priorities misaligned when a garbage man makes more than a paramedic. -Joyce

[lorennerol]

Originally Posted by RedHeaded RedLine

I think as a society we have our priorities misaligned when a garbage man makes more than a paramedic. -Joyce

Dunno...have you ever seen what happens during a garbage strike??

[JRinKY]

If GM's business case for the Kappa was to make $10,000 per car sold, and they have only broken even, some would incorrectly interpret that as losing $10,000 per car.

In a capitalist society, people are paid what the person or organization writing their paycheck expects to receive in value for, and/or what they have to pay to obtain, their service, if that is a service that the employer finds essential.

[vfx]

I'm sure many of you here deal with company finances.
There is actual loss vs reported loss in every industry.

[Bogie]

We live in a world infatuated with costs and lost. We focus on the loss of doing something, and often tend to ignore the cost of doing nothing. And since we never traveled down the path of doing nothing, on what basis do we measure cost and loss? I'll give some examples. The less we know about the untraveled path, the less we can can really understand the cost of loss of the traveled path.

Example 1: The rescue squad responding to an erroneous 911 call. Lets ignore the cost of not being available for a legitimate call and just look at the costs of the operation. Vehicle wear/tear and gas. However, when the costs are quoted, they also throw in the wages and overhead for the rescue squad and time spent. But what is the cost of doing nothing? You still gotta pay the wages and you still gotta pay the related overhead.

Example 2: An auto manufacturing employee working in a factory, building cars...at a loss. A business that builds at loss will eventually run out of business. However, depending on the contract, idle workers are often paid while awaiting new work. So sometimes, even though the cost of the build is at loss, it can be a less of a loss than not building at all. Don't forget that profit is measured AFTER all the bills are paid. Wages. Pensions. Suppliers. Insurance. Etc. So even at a loss, there is a benefit to the people doing the work and the suppliers of the products for that work. Also, what of the profit made by the suppliers, the shipping companies, the dealers/salesman, etc. GM may be producing at "loss", but people are employed...being paid...and all the industry around the build are employing people...being paid...paying taxes.

Example 3: Going to war. No need to list any specific war. We measure wars by the cost in lives, destruction, destabilization (or stabilization), national interests, etc. We always focus on the loss caused by war. How bad it is. But what of the alternative? Sometimes the loss saved by not going to war is vastly surpassed by the loss incurred by doing nothing. But once the decision is made to do something, it can be almost impossible to properly measure the cost of doing nothing.


I'm going to go back to Example 2 for a moment, since it's the topic here. People AT WORK is key to the survival of our country (any country). Producing. All our material things that make our life more pleasant, and livable....are almost all brought about through the labor of others. Money, only has value based...ultimately...on the LABOR of people. You want the measure of a country? How many of its people are producers, producing goods and services.

[Stupidbikerboy]

Originally Posted by lorennerol

(not just me, but everyone who came over from owning only foreign cars to get a Kappa).

True, with only being the important word here. That is not everyone's view. I have owned numerous vehicles of many different platforms from domestic and import manufacturers. I have had problems with all makes, not just domestics. As a matter of fact, GM trucks have easily been the most reliable vehicles in my business fleet. I have had imports and domestics be great vehicles, and vice versa. Imports are not better by default.

[vschaos]

I was looking forward to purchasing one here in the future once my money was situated. Now I am having second thoughts. My last and current car have undergone the same things. My first car was a 00 cavalier z24 which died out and while performance parts were still made the interest from future manufacturers were not there anymore. The car I have now is a 04 SRT4 that I knew would be a limited number made when I bought it, but I love it just like you guys love the these cars. The after market parts are still out there for me and many parts are interchangeable with regular 00+ neons so I am not in too bad of shape. The main thing that makes me fear getting a redline is with the platform being axed there are no interchangeable parts like there was for my cavalier I had or like the srt4 I have now....least none that I know of for the solstice and redline? I believe(please correct me if I am wrong) GM would have to still supply parts for your platform for up to 10 years after the line is axed correct? I know they must be able to supply parts for customers who have bought the car for a certain amount of years....cant remember if it was 10 or less.

[G8TR]

Originally Posted by vschaos

The main thing that makes me fear getting a redline is with the platform being axed there are no interchangeable parts like there was for my cavalier I had or like the srt4 I have now....least none that I know of for the solstice and redline?

The Chevy Cobalt Turbo is the same Ecotec DOHC that is used in the Sky and the Solstice. As well, many of the parts for these cars came out of parts bins from GM. It is also my understanding that they must support the platform for a minimum number of years.

[Darkwing]

Originally Posted by G8TR

The Chevy Cobalt Turbo is the same Ecotec DOHC that is used in the Sky and the Solstice. As well, many of the parts for these cars came out of parts bins from GM. It is also my understanding that they must support the platform for a minimum number of years.

The engine is used in the HHR SS also.

[L32togo]

Hey Bogie, I like your discussion of costs and loss.

Example 3. It's like having a leaky roof. It costs to fix the roof, but the cost of doing nothing will be far greater.

[Kappa Fan]

This same 'rumor' is being discussed over on the Sol side and is getting much of the same discussion as here.

Here is what SolsticeMan posted yesterday:
Next Solstice CANCELLED? - Pontiac Solstice Forum

Originally Posted by SolsticeMan

To paraphrase Mark Twain's quote: I suspect the reports of the death of the kappa have been greatly exaggerated.



The news of the shelving/delay/whatever of a next gen kappa have been floating around for a while now. This is not really new news. I might remind everyone that sensational 'blow the lid' stories coming from GMI or other internet sources (and especially and I need to emphasize ESPECIALLY magazines like MotorTrend) have at my estimate about 50% accuracy.

Or, they are overheard and misinterpreted statements.


Let's have a bit of a look at this - sniff the milk to see if it's still ok, so to speak - and hopefully you'll get something from this rambling.


I am fairly confident that future next generation talk of the kappa being shelved is indeed accurate. This is consistent info from many of my sources, and I've been following the Solstice and sibling cars for several years now. What it means is really open to interpretation.


One interpretation is that, since the Kappa II was likely slated for around 2012, since it is now no longer going to be a 2nd generation - the inference might be that the platform is cancelled after 2011 or 2012. My opinion is that you COULD think that. And you have a higher likleyhood of being mostly wrong.


Another interpretation is that GM has encountered the need to focus on short term cashflow. To handle that, they need to put off some planned optional expenses so they can deal with the rent next month.

There is little doubt that the major domestics are under serious economic pressure. We're looking at an automotive market that is significantly smaller than it has been in decades. It's also no secret that the market 'wants' are changing, and I find it funny that us same armchair CEO journalists that used to yell at GM and Ford that they weren't increasing truck volume to meet demand and take advantage of the potential margins of trucks - back in the 80's - are the same journalists that are yelling at GM and Ford today that they 'missed' the boat in not predicting the sharp downturn in truck sales. Many miss the point that Nissan and Toyota also chose to increase production of trucks in the US just prior to the mortgage meltdown and gas price rise.

Ah.. but again, I digress.

Like everything, the economy grinds on. This too, shall pass. Eventually, this economic downturn will change, it may re-lift the automotive industry, it may significantly change the automotive industry, but in some form or another, we'll still be buying cars in the coming decades.


So, put yourself in GM's shoes - here's a car that you've built a semi-cult following. You haven't dominated the market niche, but you sure did make a dent - the Solstice and SKY can be put down, but they cannot be ignored like miataphiles and S2klovers would like to do. Suddenly, you have to make some big azz decisions so you can pay the bills.


Restructuring, renegotiating contracts, all that is helping but due to unexpected turns in world economics you're STILL behind the 8-ball. What's the strategy that causes the least amount of damage?


I've seen the crazy quotes of GM losing $10,000 per vehicle. Um... yeah. Someone can't do math. That statement - and LISTEN to how dumb it sounds - says that GM is losing about $400,000,000 - that's four-hundred-million-dollars - a year on kappa. The contribution of the platform to CAFE/PAFE is at best neutral.

Please. If that were the true case, then the couple would have never seen the light of day, the Opel GT would not exist, the GXP/RedLine turbo would have never made it out of the development cycle.

They've made about 100,000 k