I keep going back and forth on whether America’s Big three automakers should be bailed out. On the one hand, the collapse of General Motors, Ford and Chrysler would have an immense psychological impact in the depths of a recession, not to mention the loss of as many as 2.9 million jobs, according to one estimate. On the other hand, why reward managers and boards of directors so inept that they couldn’t figure out how to remain competitive over the 30 years since the Japanese Invasion began?
General Motors is especially problematic.
The beginning of its downturn from innovative colossus to the maker of boring rental cars can be traced back to 1976 when a peppy little import called the Honda Accord first arrived in the U.S.
The Accord had just about everything that the GM cars of that era didn’t.
It was attractive, albeit in a cute sort of way. It was larger on the inside than it appeared 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 oomph and was economical, which was no small thing arriving as it did between the 1970s oil crises. A practical friend who had owned GM cars for ever bought a silver ’76 Accord and was hooked. I drove it and was hooked, too.
GM’s response to the Accord and subsequent waves of hot-selling offerings from Honda and later Toyota and Nissan (nee Datsun) was to continue churning out unattractive and uneconomical cars of dubious quality. In fact, GM’s only direct response in the early years of the Japanese Invasion was an abomination called the Chevette.
The General’s fortunes briefly improved after Rick Wagoner (small photo) took over as CEO and GM’s share price soared to a record $90. Today it is hovering around $3 (yes, three dollars) and Toyota’s stock-market value stands at $162 billion compared to just $6 billion for GM. Meanwhile, Ford Motor is trading at a robust $1.80.
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