Less is Indeed More

"Mary Mooney and her husband were soaking up the sun in Florida when they saw a Buick Enclave… and decided they just had to have one. But when the couple called two dealers back in Michigan, where they live most of the year, the model they wanted was sold out at both.

"So instead of flying home, the Mooneys bought an Enclave in Florida and drove it 1,300 miles back to Michigan…

"The tight supply of Enclaves… is no accident. Bouyed by a new labor contract that reduces its costs, GM is keeping a tight rein on production of the Enclave in an effort to avoid past mistakes that forced it to offer discounts and cheapened the image of the company's brands.

"'We want to keep [the Enclave] hot,' says GM Vice Chairman Robert Lutz. 'Nothing destroys the value of a new product faster than over producing.'

"In the past, when GM had hot models, it usually built as many as it could, and almost always ended up with lots filled with unsold vehicles. For example, the Chevy HHR, a retro-styled wagon launched in 2005, sold briskly at first, often at full sticker price. But after cranking up production and offering discounts to boost sales, GM had a glut. Fifteen months after the HHR was introduced, Chevy dealers had enough in stock to last almost five months without ordering more. Since then, GM has had to continue discounting and dump thousands of HHRs into rental fleets, which eroded the margin on the car, and badly watered down its cachet…

"It's a risky move. The crossovers… make a lot of money for GM at a time when sales of its highly profitable trucks and SUVs are falling. GM is also struggling to produce steady profits in North American and needs every dollar it can bring in.

"The need to maintain revenue means GM can't apply the tight-supply approach to all of its models, their best-selling cars and trucks…

"Meticulously controlling supply takes a page out of the playbook used by many of GM's more profitable foreign rivals… Both Toyota Motor Corp. and Honda Motor Co. ratchet production levels up or down to stay in line with demand and minimize the need for discounting."

(“How GM Handles a Hit: Build Fewer; Wary of Repeating Mistakes, Car Maker Cuts Production To Keep the Enclave Hot.” John D. Stoll. Wall Street Journal: October 31, 2007. pg. B.1)

THE TAO SAYS, "One gains by losing." And, "If you want to become whole, let yourself be partial." To everything there is a season.