I'm Still Worried
Chrysler and Ford are getting so much attention lately, there's a tendency to assume GM is quietly getting its house in order.
July 1, 2007
Chrysler and Ford are getting so much attention lately, there's a tendency to assume GM is quietly getting its house in order.
I'm not convinced.
There has been plenty of trouble before, and new leaders always have risen up to guide GM out of the wilderness.
Bob Lutz has started the rehabilitation. We assume new leaders will finish the job. But now for the first time I am seriously worried. I see bad things:
The remaining piece of General Motors Acceptance Corp. is being put up as collateral for a line of credit. Selling half of GMAC is bad enough; now the remainder of this golden asset is seriously threatened.
The medium-duty truck business is for sale. It's a small unit, but it's still part of the core vehicle business. Piece-by-piece, GM is being dismantled.
GM is throwing another $1 billion into the Delphi Corp. bailout rat hole; now it's $7 billion. For what? It's not like it is spending an extra $1 billion to save Pontiac or Buick. Add these to other troubling signs: Pontiac and Buick are turning into Zombie brands, the living dead. They exist, but there are no visible signs of life, such as product development or marketing.
Pontiac has 81 exclusive dealers, Buick has 119. For comparison, Suzuki has 215 exclusives and Kia has 367.
Pontiac sales have dropped from 438,000 units two years ago to 410,000 last year to maybe 310,000 this year. Buick is down from 282,000 deliveries two years ago to 241,000 last year and 170,000 this year. Zombies.GM wants us to believe it's because it is cutting back on fleet sales. That's a tiresome speech.
Yes, GM puts Pontiac and Buick together with GMC stores, but such combinations rarely work.
Still, this arrangement keeps the Zombies walking. They don't have to be buried and given an expensive funeral ala Oldsmobile.
Former Pontiac chief Bunkie Knudsen turned the division around in the 1950s. John DeLorean did it in the 1960s, and Bill Hoglund did it in the 1980s.
And I remember when Harlow Curtis made Buick a bestseller. These divisions can be saved, but only by leaders who know cars, and who love them.
Lutz can't do it alone. There must be a Mr. Pontiac, a Mr. Buick; people like Hoglund and Curtis with enough power to order things done. Another concern is GM's dependence on European design and engineering. Never mind that not one European GM car has succeeded in North America, ever.
Those cars don't even do well in Europe. GM's Adam Opel and Vauxhall units have a combined 8.6% share of the European market.
After 80 years in Europe, an 8.6% share. That's what GM is depending on to create winning cars for the U.S.? I know GM now is bigger abroad than at home, and that GM still outsells Toyota in North America, South America, Europe and China. But it is far from being out of the woods.
Jerry Flint is a columnist for, and former senior editor of, Forbes magazine.
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