Can GM Come Back? - The American Spectator | USA News and Politics
Can GM Come Back?

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.

Eric Peters
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