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Saving the General

It will take a lot more than repackaging to restart GM.

by
Brian Douglas

Bio

June 7, 2009 - 12:30 am
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Nearly everyone with a keyboard and opinion has weighed in on the chances for the newly bankrupted General Motors to emerge from its reorganization and prosper. And it’s all but impossible to read one of these opinion pieces without hearing the familiar saw of “building products that shoppers want to buy,” as if the old GM never launched a successful product.

Part of a successful strategy in running any company is financial control. If you don’t have the money to pay people and suppliers and your financial planning is inept, you’ll never succeed, let alone prosper. From that standpoint, GM seems to be more than staffed. Jelly Belly is the only company I can think of with more bean counters than the current General Motors. If CEO Fritz Henderson and CFO Ray Young ever get stuck with a financial issue, they have a deep bench of bankers, hedge fund managers, and assorted Ivy League MBAs that can churn out Excel spreadsheets till the cow’s eyes glaze over.

Then there’s that not unimportant product thing. You know, those I’ve-got-to-have-it vehicles that will bring customers stampeding back into new GM showrooms. Actually, GM is in decent shape on this front. Next week, I’ll drive a production version of Chevy’s new 2010 Equinox, a compact SUV that has been completely remade to go head to head with Toyota’s RAV4, Honda’s CR-V, Ford’s Escape, and Nissan’s new Rogue. When I gave this car a quick examination at GM’s design center last December, it looked like a real winner. It starts with class-leading fuel economy of 22 city / 32 highway and if it drives as good as it looks, Chevy should have a hit on its hands in a tough segment.

Chevy’s Malibu is competitive in the tough mid-size category, the Traverse continues to impress critics like Consumer Reports in the mid-size crossover crowd, and the new Camaro joins Corvette to add some spark to the bow-tie brand. Cadillac’s CTS may be one of the best kept secrets in the universe of luxury sedan buyers who are certain that only Europeans can produce a great driving machine while only Japanese automakers can offer consistent quality. And Buick has focused its lineup down to three models: the full-size Lucerne sedan, an all-new Lacrosse mid-size offering, and the Enclave crossover SUV.

So let’s assume that GM will have a gaggle of cars and trucks that includes very competitive offerings when it emerges from bankruptcy. And it’s assumed that the “new GM” will be armed with the finances and cost structures that level the playing field. What’s less clear is how the taxpayer’s $65 billion investment in this new enterprise will get repaid in a timely fashion, but that’s a subject for another commentary.

To become successful in a crowded, competitive market like North America when the global auto industry is rife with overproduction, GM will have to insure that every vehicle is supported with brilliant marketing. It doesn’t matter if the Equinox or CTS or Lacrosse is better than the competition if the intended buyer doesn’t put the vehicle on his or her shopping list.

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