California, Here I Come

This column is for all my friends at General Motors. It's not criticism. I believe you are on the road back. But I want to warn you that you still are terribly weak, weaker than you might think, and to show you how difficult the road back will be. Just remember what my old friend Tom Paine said: “Hell is not easily conquered, but the greater the struggle, the greater the victory.”

There are going to be embarrassments along the way. I would predict that GM will lose market share this year. It can't be helped. The cars are taking a beating even if the trucks are strong. And Honda with its Odyssey minivan will outsell all three GM minivans combined this year. I recall many years ago, Lee Iacocca compared GM's minivan efforts to his at Chrysler. He said something like, “I gave them six years and they still can't get it right.” Now it's 18 years, and they still haven't gotten it right. Enough already. Memo to Bob Lutz: Get the minivan right. There are opportunities still coming here.

But these aren't my big concern. My problem is California. I have thought for many years that California is a predictor of trends. If they are wearing T-shirts inside-out in California, or buying 3- wheeled scooters, then pretty soon we all will be. The same with cars.

I don't know if this predictor business is true today. But here is why I am worried. General Motors is getting licked in California. It's happened because management worried more about China than California and it's big trouble.

Look at Cadillac. Now, you know, GM is investing heavily to rebuild Cadillac, the CTS entry luxury model is out now, the roadster and the crossover and the new Seville and the Cadillac Suburban are coming, and that's a lot of new stuff.

Nationally Cadillac had 172,000 sales last year, to 213,000 BMWs and 207,000 Mercedes and 224,000 for Lexus. My friends at J.D. Power showed me the California sales figures they collect. In California Cadillac had 12,000 sales compared to 52,000 for Mercedes and 48,000 for BMW and 44,000 for Lexus. Even Jaguar sold 8,000 cars in California, which is pretty close to Cadillac.

What does this mean? Well, it might mean that if what they call “the big one” ever hits, that's the earthquake that pushes California sliding into the Pacific Ocean, then Mercedes, Lexus and BMW are in real trouble. Or it might mean that Cadillac is in much worse shape than we thought because the rich aren't buying them at all and recovery is a much harder job.

Let's go deeper: Here are GM sales figures from the state of California for all of last year:

Now let's look at Toyota sales (the company, including Lexus) in California last year:

So Toyota has closed within 13,000 units of GM. With a new Camry and new Corolla I would predict that Toyota would outsell GM in cars this year in California and quite possibly in total vehicle sales.

Of course, Toyota already outsells Ford in cars. Here are the Ford California figures. The figures include Volvo, Jaguar, Land Rover, Lincoln and Mercury:

In fact, Honda sold 175,000 cars (including Acura) cars in California last year, easily outselling Ford and nudging past Toyota. But that is just in cars, and Honda is weaker in trucks, so the Honda vehicle total doesn't threaten the others. It's possible that Honda, too, will outsell GM in cars this year, not in total vehicles as Toyota might, but in cars.

Why don't I pick on Ford instead of GM? After all, Ford has been the top vehicle seller in California but is slipping, and GM or Toyota could well be No.1 this year. Because the euphoria of a recovering GM is so great I want to warn everyone on how tough this is, and how weak GM is, even today.

If California still is a predictor state, these figures tells us that for GM and Ford it is going to get worse before it gets better. These California figures indicate that the national sales figures might be misleading.

How?

Because those national numbers include large rent-a-car numbers and vehicles sold under the various factory plans to auto company workers, supplier workers and relatives, too. You don't see much of that in California.

The new cars and trucks coming from Detroit must be terrific to start rolling back the competition in California. Just okay won't do.

Jerry Flint is a columnist for, and former senior editor of, Forbes magazine.