GM: Still Clueless After All These Years
This is a make or break year for a once mightly colossus known as General Motors.
I trace the beginning of GM’s downturn from a leading automotive innovator to the maker of boring rental cars back to 1976 when a peppy little import called the Honda Accord first arrived in the U.S.
The 1976 Accord had just everything that the GM cars of that era didn’t.
It was attractive in a cute sort of way. It was larger on the inside than it appeared to be from the outside, not the other way around. It had a rear hatch that opened to a collapsible back seat, offering lots of storage space. It handled well, had some oomph and was economical, which was no small thing arriving as it did between the two 1970s oil crises. A practical friend who had owned GM cars forever bought a silver ’76 Accord and was hooked. I drove it and was hooked, too.
GM’s response to the Accord and successive waves of hot selling offerings from Honda and later Toyota and Nissan (nee Datsun) was to continue churning out formulaically unattractive and uneconomical cars of dubious quality. In fact, GM’s only direct response to the first wave of the so-called Japanese Invasion was an abomination called the Chevette.
Please click here to read more.
13 Responses to “GM: Still Clueless After All These Years”
As a business owner trying to anticipate the public taste is an art.
What people say and what they do are often different.
Sometime things have to get worse before there is a paradigm shift. Maybe GM and Ford will prevail in the the next generation of cars.
But I thought that it was all the UAW’s fault!
The secret to having a CEO who knows how the market and industry work is to promote from within. In the most recent years, however, we’ve seen these corporations hire from without for their top positions, selecting CEOs based on connections to “who they know” instead of “what they know.” And so, we see decades of cluelessnes as to what the public actually wants and how to run a company and keep up employee morale. The value of a loyal employee is worth his weight in gold, as replacing an employee costs up to three times as much as keeping the one you have. Happy employees will create a better product and contribute more to the company.
I intentionally left out any mention of the UAW and the enormous union pension burden that GM is carrying.
Why did I leave it out?
Because GM’s wounds are entirely self inflicted and its upper management hubris enormous. Early computer giants like CDC quickly fell by the wayside because they failed to change and innovate as the IBMs, Microsofts and such gobbled up the market. GM has had 30 years, by my reckoning, to get its act together and it still makes incredibly boring cars. The only reason it’s still around is its enormous but fast dwindling cash reserves, rental car fleets and the still substantial number of people who will remain GM loyalists until they draw their last breath — which in the case of many of these people will be sooner rather than later.
Alabama Moderate,
If you look at polariad and Kodak, they have suffered tremendously from always promoting from within.
General Motors has many problems but the reason the finance guy was made president was the profits that GMAC was making.
SuperDestroyer:
Damn! You have summed up in fewer than 25 words what I took 1,200 words to say.
Good post.
GM’s problems aren’t all caused by the UAW (Honda, Toyota, BMW et all are all building cars in the US with workers under UAW contract).
It’s problem is simple. It builds crappy cars, and has been doing so for over 30 years. And even if it began building quality cars tomorrow, that stigma will be with it for decades.
Stick a fork in GM, Ford, and Chrysler…they’re all done by Q1 2008.
Mr. Prez:
An omniscient statement, which I would elaborate on as follows . . .
GM is forced into the arms of a foreign consortium to survive, the Buick brand is put out of its misery and a Swedish-led group buys back what’s left of the Saab subisidary.
Ford is forced into the arms of a foreign consortium, the Lincoln brand is put out of its misery, and the Jaguar and Aston Martin subsidiaries are cast adrift before being gobbled up by the sultan of Dubai.
Daimler kicks Chrysler out of the castle and it is forced into the arms of a foreign consortium.
In the 1970′s, before the oil crunch, the Japanese cars were considered to be junk. The phrase ‘made in Japan’ implied something cheap and inferior. The actual quality was inproved, the percieved quality was greatly improved. Today, may highend EU cars still have a perception of quality while actual physical quality is quite poor. A little nationalistic purchasing would help, ‘made in America’ quality is now considered like ‘made in Japan’ in the past. The actual ‘real’ truth is somewhere in the middle.
Predicting what consumers will buy is not rocket science. It’s market research. US automakers have been ignoring both market research and sales figures. Both show that Americans do not want what automakers insist on continuing to produce.
The Big 3 was profitable when the huge SUV’s and pickups were selling off the charts. Nevermind that these tricked out ‘work truck’ hauled 5’4” housewives to the mall or the kids to soccer. While 4wd Saab or Volvo stationwagons would have sufficed, America is big and needs a big truck for the drive to Starbucks. The Japanese automakers are still behind in this market, high gas and the economy killed the Suburban, not Nissan.
GM is still years behind Japan in hybrid offerings, still pumping the bulk of their advertising dollars into HUMMER promotion when gas is $3/gallon, and still blaming their health care costs for the negative profit margins. I really hope they get their act together soon.
The Big 3 still think that their advertising will persuade Americans to buy whatever has the biggest profit margin for them. They need to pay much more attention to their customers. Are any of you familiar with the large number of employee blogs that Microsoft has? Can you imagine car company engineers and executives taking part in blogs that give them a feel for how their most loyal customers feel about their products and where they think they ought to go in the future?