By Eric Peters on 6.14.06 @ 12:07AM
It can if it learns that less is more.
General Motors has perhaps the most extensive R&D facilities
and resources of any automaker, countless brilliant engineers and
stylists, an enormous manufacturing capacity and huge potential
cost savings achievable through economies of scale that, together,
give it a formidable capacity to pull itself back from the
abyss.
But will it do so?
I came back from a recent drive of the new Saturn Sky feeling
queasy about GM's future. On the one hand, the Sky's a beautifully
styled roadster -- perhaps the sexiest design to come out of GM
since Bill Mitchell's Sting Ray (two words!) Corvette in the early
'60s. On the other hand, it must share floor space,
marketing/production resources -- and compete for buyers -- with
and against its sheetmetal sister, the Pontiac Solstice. And both
of these cars split the difference with the Opel-badged version of
the same basic car that's sold in Europe.
Porsche doesn't sell three versions of the 911 or any other
model under three different brand names; neither does Toyota -- or
any other successful automaker. Why does GM continue to do so?
Wouldn't it be more sensible to produce one tightly focused product
-- with all in-house resources devoted to its success in the
marketplace -- rather than split the effort three ways, thereby
diluting the force of the effort and muddying the waters as far as
the integrity of the brand?
The situation with Saturn is far from isolated. GM still has far
too many models, excessive "overlap" -- and at least two divisions
(Buick and Pontiac) that at minimum need to be pared down
dramatically, if not retired entirely. Can anyone come up with a
sensible business reason why Pontiac and Buick are selling SUVs and
minivans? Buick, all by itself, has three such vehicles -- the
Rendezvous, Terraza and Rainier. Ditto (or triplicate) Pontiac --
the Montana, Torrent and Vibe. That's half-a-dozen essentially
similar vehicles (several sharing "platforms" and differing from
each other only in terms of minor trim changes and pricing points)
from just two of GM's way-overextended divisions. Divisions that,
between them, have less than 5 percent market share.
How do you squeeze a profit out of that?
Answer: You don't.
YET GM RESOLUTELY REFUSES to take the steps necessary to thin the
herd and restore some coherence to its product lineup. In fact, it
continues to add new models -- and multiple versions of the same
basic model (as in the case of the Solstice/Sky/Opel GT) so that
even when a good design is produced, it gets lost in the shuffle.
It's an open secret that Pontiac (and surely Saturn, too) can't get
sufficient product to its dealers -- because there aren't enough of
each model being built to satisfy the demand for them. Instead of
having three new Skys on the lot, there's just one (or maybe none)
because the allotment has to be shared with Pontiac (Solstice) and
Opel (GT).
What good is a great car if you can't deliver the goods to
buyers?
The on again/off again Camaro's another example. Instead of
sticking with it -- and (like Ford) updating the car after a
not-so-hot re-style in 1994 caused sales to dip -- GM threw the car
away. And in so doing, ceded the entire market for cars of this
type to competitors, who promptly filled the void.
Now GM's working furiously to bring Camaro back -- and recover
the customers it gave away. It will be an uphill climb. And it may
be too late. Gas prices hovering around $3 per gallon make the
purchase of a V-8 muscle coupe -- an inherently impractical car to
begin with -- even harder to rationalize. GM will have to fight for
an ever-declining share of an already slim market niche against
well-established rivals like Ford's Mustang -- which has a
head-start of 2-3 years on Camaro, in terms of cashing in on the
"retro muscle" design trend -- as well as an unbroken legacy of
more than 40 years in continuous production. Ford never abandoned
its "halo car," even during the darkest days.
Why did GM?
THE OTHER ISSUE BESETTING GM is more subtle -- though it really
ought to be obvious by now. It is, simply put, that parity is not
enough. GM must exceed the quality/value and appeal of its
competitors -- not merely be competitive with them. Because that's
the only way GM will ever convince the legions of former customers
who got burned in the past to give the company another chance at
their business. It doesn't matter that a 2006 Chevy is as
well-built as an equivalent Toyota. It must be noticeably,
objectively better. It must be less expensive -- yet offer more, in
terms of features and function. And it must hold its value better
over the years instead of depreciating like Enron stock the moment
it is driven off the dealer's lot.
This is the bar GM must reach -- and which it hasn't even come
close to, with the exception of a handful of its cars (for example,
the current Chevy Corvette -- which is truly a world-class machine
capable of out-performing rivals costing 2-3 times as much).
Unfortunately, the Corvette is a rare peak in GM's current lineup.
The rest are generally very good. But they aren't outstanding.
And that's just not good enough.
topics:
Business
