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GM rant Part 2

Posted 11-05-2008 at 03:04 PM by guionM
By now, I think even the most unabashed, rabid, evangelical member of the General Motors religion finally realizes after months of denial that GM is in the most serious shape of the US big 3 automakers. General Motors market value is in the negative billions range, it's stock that was as high as $40 just over a year ago is selling for around 6 today. GM's decision 10 years ago to put all it's cards into the large truck basket was at best foolhardy given the various fuel crisises we've had over the years, and how quickly the market changes. Even GM's mentality and bureaucracy only began to change as the ship was already half underwater.

General Motors is the world's best automaker that hasn't been run quite like the world's best automaker. But this isn't because GM didn't try.

When GM proclaimed an end to badge engineering and product overlap, that was a perfect idea. When GM created a system that could get a new vehicle developed in 18 months..or less... that to this day is something that's doubtful Toyota can even do. GM intergrated it's global product development, creating specific homerooms in each country, where there was a special expertize, which was splendid. GM focused on taking advantage of the opening Chinese market, and now GM is number 1 there. GM combined Buick, Pontiac, and GMC into a single division to cut manpower, trim resources, and have a single line of vehicles which (though questionable in mix) was a great idea. Creating a chassis and an assembly line capable of producing everything from a 2 door sports coupe to a 4 door sedan to a full sized luxury car to a sports pickup truck was the highpoint of GM's capability by making so many different vehicles from the same chassis.

What happened?

GM backtracked.

Badge engineering returned. GM created multiple versions of the same vehicle. The approval process for a new vehicle didn't change as drastically as the development process. Instead of sticking with their dead-on strategy of coordinating their lineup, they caved in to big dealers in the only part of the country where certain vehicles sold instead of those smaller dealers in areas where GM needed to expand. An assembly line that was to produce a wide range of vehicles now sits likely to produce no more than 2 versions of the same car.... if the company doesn't implode first.

Alot of this seems like Monday morning quarterbacking, but by learning from the immedeate past, you can not only fix what's wrong, but avoid repeating it in the future.

One of the noraml reactions you hear about GM's misfortunes is that it's because people are buying imports and wrecking our own company. That may be true to some extent. However, that complaint loses it's legitamacy when you realize that GM itself essentially pulled out of the car business and imports steped in to fill the void.

It was about 10 years ago or so that Jon Moss himself said that the future was in FWD, it was Ron Zarella himself that said his main regret running GM was that he didn't devote even more resources to personal trucks and SUVs. Another GM official indicated that the car market wasn't making much money so the funds would go to where they felt the market was... again trucks.

You don't need a MBA to understand what happens in that case. Others take over the market you vacated. And thats when Honda, Toyota, and other manufacturers step in to take your place. They put investments into making better cars when you aren't. Next thing you know, you have another fuel crisis, economic bodyblow, or increased CAFE standards, or even nothing more than a public turn away from the segment, and imports have the edge and you're playing catchup with a fast moving object that has a reputation built up as long proportional to you're being erroded from inaction.

The public DOES infact respond to new American cars that stand out and are done right. Chrysler's 300 and Charger (and even at the begining, the Magnum) were cars that even both Time & Newsweek wrote about as the return of American cars. The current Mustang grebbed public excitement unlike anything in recent years when it was new. Until the recent economic meltdown, Ford was doing the impossible: steadily increasing their car sales in a market that was generally going downward. Ford's Fusion sales were on fire as far as American cars go. GM's own Solstice is selling better than Miata. The Malibu is still a home run for GM. Cadillac is taken seriously among luxury car buyers. There's no shortage of Corvette buyers either.. let alone Z06 buyers.

But the Cobalt is no Honda Civic, in style or in feel.
Is a Lacrosse really on the same level as a Lexus ES?
What's a better built car, an Aveo or a Yaris?
What do we have that is on par with an FJ Cruiser?
A Mini?
A Prius?

Yet, a Dodge Challenger can sell well in the middle of a economic meltdown, and even had a great start when gas was knocking at $4 per gallon.

The public responds to American cars that compete.
They go elsewhere in instances where they don't.

Imports to blame? I don't think so.

So what if GM fails? Should you avoid buying GM cars to avoid being stuck with a "Studebaker"?

In a word....NO!

I'm not saying that because a reverse buying panic is the last thing GM needs right now (which is true) but because no matter what happens to the General Motors Corperation, there is one thing you can almost bet your life on........Chevrolet and Cadillac will survive.

First of all, almost any entity can buy General Motors right now. Walmart can buy GM. Exxon alone can buy all of GM and pay all it's debt with less than what it earns in 4 weeks. GM has global reach and resources. It would be almost a steal if anyone mandated free reign to reorganize the company as a condition of purchase.

Second, Chevrolet is a massive car company in it's own right, Cadillac is a profitable luxury brand that's starting to get noticed around the world as a legitamate performance sedan. If you chopped out the other GM North America divisions and it's related marketing & development networks and moved the few standouts to Chevrolet or Cadillac (ie: Solstice/Sky, G8, & the Enclave), it's likely GM would see a boost in sales of the divisions left, a drop in marketing costs (sometimes more than developing a car), and a chance to become at least somewhat profitable.

GM would be a smaller company (not by much, though), and it would look alot different than it does today or in the past. But even in this worse case scenario, I see Chevrolet and Cadillac continuing.

In short, GM may die.

But the Cadillac-Chevrolet Corperation would survive.
Total Comments 2


JasonD's Avatar
Very very interesting.
Posted 11-08-2008 at 01:21 PM by JasonD JasonD is offline
If you chopped out the other GM North America divisions and it's related marketing & development networks and moved the few standouts to Chevrolet or Cadillac (ie: Solstice/Sky, G8, & the Enclave), it's likely GM would see a boost in sales of the divisions left, a drop in marketing costs (sometimes more than developing a car), and a chance to become at least somewhat profitable.
Why not do this now? Camaro, and Vette meet the mission statement I think Pontiac should have but shouldnt be badged that.G8 could be exactly as the Mid east Chevy Lumina. Buick China should have been Caddy or Holden.
Posted 01-01-2009 at 07:14 PM by 5thgen69camaro 5thgen69camaro is offline
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