Corvette sales profit

**Dan D.** · December 23, 2014, 10:31 AM

Re: Corvette sales profit

Came across your posting while browsing and thought I'd pass on some useless information from millennium past. For what it's worth, I retired from General Motors. I was a District Manager for Pontiac Division for 30 years and spent an additional 12 years with G.M. Training. Profitability was always problematical with the old "Y platform."...I really don't know what they call it now. But, depending on who you talk to...it's value as a "Halo' vehicle was and probably still is priceless. The value of a "halo" car is its ability to arouse the appetite of buyers who may not intend to buy that specific vehicle...but one, that in their own minds, gives them kind of the same feeling. I guess it's kind of like selling the "sizzle" rather than the steak. But, hey, in this world...it's not what's true that counts...It's what people think that's true. Let's face it...the original T-Birds and Corvettes spun off the Muscle Cars and Pony Cars...and that's where a lot of money was made. When it comes to marketing...the idea is to maximize the sale of substantial numbers of profitable units. Over the years, profits were often marginalized on "Limited Editions" and "Special Editions" because that "halo" effect promoted the sale of a lot of other units. There always was and probably still is a continual battle between...Marketing...Manufacturing...and...Accoun ting. Marketing wants to build cool things that sell. Manufacturing wants to build things with a fixed, steady build rate, with the least variations, in the least amount of time, with the fewest faults per hundred. Accounting doesn't care what gets built...as long as it makes money.This is why sometimes the field sales organization can find itself in a position of trying to sell what the factory wants to build rather than the factory building what the people want to buy.The fact is...the accountants almost killed the Corvette several time since 1953. Lucky for us "car people" they haven't succeeded ...yet. But anyway, I'm rambling...but then again...that's what old people do. Have a great day

**Bill M.** · December 23, 2014, 12:19 PM

Re: Corvette sales profit

I read somewhere years ago that the Corvette did not start covering itself until 58 or so. Vette Vues or Vette magazine.

**Dan D.** · December 24, 2014, 11:41 AM

Re: Corvette sales profit

I don't know about that. It really all depends on who was disseminating the information and why. You've got to remember that G.M.'s accounting system was so convoluted, I don't think the IRS ever really figured it out. Back in those days G.M. actually owned their own sources of production. G.M. actually owned foundries that produced product that they sold their own machine shops at a profit that sold pieces to the Parts Division at a profit that sold to the Assembly Divisions at a profit...etc. I remember one time, as a Service Rep in the 60's...We had a problem...the metal brackets bonded to the bumpers was having a "chemical effect" causing the bumpers to discolor on the outside. If that occurred while the car was in warranty...our fix was to replace the bumper. I don't remember the numbers but...let's say the bumper was maybe $150.00 and the labor was maybe another $75.00 or $80.00. Anyway we were looking at a warranty claim of over $200.00. I made a deal with a re-chroming outfit to get the whole job done for around $100.00. So I told the Dealers in my area to sublet this out and I'm feeling pretty good because I'm saving the Company over $100.00. Anyway, after the first couple started coming thru, the big honcho called me in and asks what I'm doing. Me, like a dummy, think I'm going to get a pat on the back...wrong. He tells me "you don't understand how this works." ...Who do you suppose sells that bumper to the dealer doing the warranty?" I reply, "our Parts Division." He says, "Do you think we made money on it?' Me again, "I suppose we did." He says again, "Who do you suppose sold the bumper to the Parts Division?' ....Ahhhh. As crazy as it sounds...profits were recorded on work we did for "free." Let's face it...that concept is impossible to comprehend...but after that a new bumper was placed on every car whose owner complained. You can imagine the profit that was made when we sold the bumper to the dealer to be used for the warranty repair. Now, as to weather Corvette ever actually made a profit in it's own right...I don't know...BUT...I sure wouldn't bet the title of my Corvette on it any way or the other.

**Ken A.** · December 24, 2014, 02:29 PM

Re: Corvette sales profit

What you don't realize is that GM was, at one time, a finance company that also happened to make vehicles. GMAC did 20% of the gross revenue and 80% of the profit.

**Dan D.** · December 25, 2014, 10:36 AM

Re: Corvette sales profit

You are correct that GMAC made a lot of money for GM. My comments addressed vehicle selection. GMAC is really another story. Billy Durant created GM in Sept. 1908 with Buick Motor Co. which he owned. In Nov. 1908, he bought Oldsmobile, and in 1909 he acquired Oakland (which later became Pontiac), Cadillac and two truck companies (Rapid Motor Vehicle Co. & Reliance Motor Truck Co.) which became GMC. Chevrolet was added in 1918. So now there were five car divisions and a truck division. As I pointed out in my earlier post, Manufacturing's goal is to keep production at a fixed, steady pace which will hopefully minimize production costs. I don't mean to be a smart ass, but the truth is...there's not much difference between the production cost in the highest priced Cadillac and the lowest priced Chevrolet. Maybe a few more "operation steps" in the Caddy.The major cost difference is in the content. Now, to keep the line running at a steady pace, Dealers have to be encouraged to order cars for inventory...which can sometimes sit around for a while. Believe me, GM never shipped a car that wasn't already paid for either in cash or direct draft from some financial institution. Back in those days, dealers would come and go and dealerships would spring up and disappear almost overnight, making them unpopular with the local banks. GMAC was formed in 1919 to provide Dealers with a "Floor Plan" source (at the prevailing interest rate) to allow them to inventory product and as a matter of course, finance cars for customers (at prevailing interest rates). These operations became extremely profitable, especially since Dealers were"encouraged" to use GMAC rather than any other outside source. When the banks started complaining there was a lawsuit that resulted in a "cease and desist " causing GMAC to be aseparate corporation. Ford had a similar experience with their financial arm which was later separated from Ford (CIT). I can remember, as anemployee of a car division, I was not allowed to be in the same dealership at the same time if an employee of GMAC was present...one of us had to leave. Of course, as you know in 2006 a majority stake in GMAC was sold off to Cerberus (Ally) to raise some sorely needed capital. Let's face it...what happened to General Motors was the result of a string of some really stupid management decisions. But, now is not the time or place to go into it. Let me leave you with one thought...when the"non compete" is over and, if interest rates should make it lucrative...GM will have its own totally owned financial arm again...business is business...providing management is smart enough to do what has to be done...then again?...I'm rambling. Have a great day

**Carnell M.** · December 25, 2014, 11:16 AM

Re: Corvette sales profit

That's some very interesting and informative info. Thanks

Corvette sales profit

Corvette sales profit

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