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Can GM Get Its Mojo Back?

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Recalls deliver body blows to potential conquest sales.

General Motors is on the ropes, knees buckling, as it takes repeated body blow.

The recalls keep coming. And the federal government’s $35 million fine is only the beginning of a series of escalating payouts before all of this passes.

Someone told me GM will be fine. After all, it is sitting on a $35 billion cash reserve. Well, I seem to recall that is almost the identical reserve GM was sitting on when Rick Wagoner took the helm not so many years ago. It took less than a decade of losses to burn through that before the automaker entered bankruptcy.

I’m not predicting that will happen again, but Mary Barra inherited the whirlwind when she became GM CEO this year. At least a decade or more of cover-ups and admitted misdirection falls on her. It’s too bad the reckoning arrived on her watch.

GM just announced an additional four recalls affecting another 2.5 million vehicles. It announced five recalls the week before that.

It is approaching 14 million vehicles and $400 million in related costs just this quarter alone, not counting litigations and additional fines. A recall doesn’t automatically mean something is wrong with a particular car, but the recurring recall message to consumers seems to be GM cars aren’t safe.

Initially, dealers and manufacturer reports said the recalls didn’t appear to hurt sales.

At the grass roots level, I am beginning to hear a different story from dealers as the negative GM news seems to dominate the media.

GM is on a full-court press to keep to talking points and to do damage control, but there are signs of that wearing thin with consumers.

For the first time, I am getting the impression from a number of sources that GM products are increasingly being scratched off some consumer shopping lists.

As with any of the domestic brands, GM has a loyal clientele. A large number of these people are likely to continue to buy GM cars and trucks. But the automaker might have a harder time picking up conquest business it would have gotten had it not been for these recall issues being hammered at endlessly in the press.

This comes at a time when Mark Fields is taking the reins at Ford. The question is whether Ford is in a position to take conquest market share away from GM.

Ford has had several less-than-perfect vehicle launches. For Fields and his team, the upcoming F-150 pickup launch must be perfect.

On the other side of town, Sergio Marchionne’s Fiat-Chrysler Automobiles might be overreaching. P.T. Barnum is long dead, but thankfully we have Sergio.

Many people consider Dodge, Chrysler, Jeep and Ram as domestic brands thanks in part to the “Imported From Detroit” genius of their marketing campaigns.

But Chrysler is like a rubber band. It has made tremendous strides in the market, but it is stretched. It may not be in a position to aggressively go after GM conquest customers.

That shifts the focus away from the Detroit Two-and-a-Half and to the imports.

It will be interesting to see how the Japanese and Korean automakers market safety, quality and reliability in coming months.

The Germans, especially Volkswagen, already tout safety and German engineering so loudly that perception might appear to be reality to the consumers in the market.

Toyota, Ford and Audi have all survived major safety and recall issues, as has almost every brand through the years.

GM will emerge on the other side of this eventually. Until then, the question is how much will it lose in money, market share and consumer confidence. 

Keep those comments, emails and calls coming.

Jim Ziegler president of Ziegler Supersystems based in metro Atlanta, is a trainer, commentator and public speaker on dealership issues. He can be reached at zieglerss@aol.com. WardsAuto readers also may comment on this article by logging in or registering below.

 

Discuss this Blog Entry 2

on May 28, 2014

GM would have much better prospects long-term if they would make the slightest effort to improve their reliability quality...even if just on their high profit cars. The Buick Enclave, according to Consumer Reports charts has a reliability rating that tanks as soon as this car passes out of warranty. They have had 7 years to fix this, but have chosen lower costs today over a better reputation and sales in the future. It continues to be live-for-today over at GM. GM management seems more interested in this years profits than in building the company.

on May 29, 2014

My 2008 Impala just passed 81,000 miles and the only issue that I have is a rear door lock actuator. Otherwise it has been a good car. I will stick with GM as they have treated me better than my last 2 Fords. I also do not believe that the "13 deaths" linked to the ignition switch recall were GM's fault. If you are too stupid to wear a seatbelt then you shoulder at least 50% of the blame.

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Steve Finlay

Steve Finlay is the editor of WardsAuto Dealer Business magazine and a senior editor for WardsAuto.com. His journalism career started 42 years ago as a crime reporter. A Michigan native, he likes...

Jim Ziegler

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.
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