I’m starting out with 5 I’m starting out with 5 years+
I think that GM failed because they make mostly lousy vehicles, and don’t know how to market the ones that are actually decent.
Now with the government mandating that they eliminate their most profitable cars (the ones they produce in China), and focus on high-cost, low-return vehicles like Hybrids, I don’t see how they can turn a profit.
All that eliminating their debt does is start the debt clock at zero again. This is like giving someone who just filed bankruptcy a brand new credit card with no limit. They’ll run up the charges all over again and have no way to pay it.
UCGal
June 2, 2009 @
3:01 PM
I put up to 5 years. I think I put up to 5 years. I think they’ll want to get it off the books before the next presidential election cycle. Or at least be close to getting it off the books.
Whether that’s a good reason or not doesn’t matter. I just think the politics will dictate that the pol’s get the car company off the books before the election.
no_such_reality
June 2, 2009 @
7:54 PM
Yep, 3 years max. At three Yep, 3 years max. At three years, the election cycle is in full swing and it needs to be off the books and a profitable deal for the government or it’s lambasting time.
Omega Point
June 2, 2009 @
8:08 PM
I see it opposite way. There I see it opposite way. There will be no recovery for the two BK automakers which means the politicians have to keep supporting them well past 5 years. Afterall, what politician wants to be responsible for all the job losses.
barnaby33
June 3, 2009 @
8:48 AM
I voted 5 years, but I don’t I voted 5 years, but I don’t see GM making it that long. Of course there will be more multi-billion dollar bailouts along the way before it finally gasps its last breath.
Josh
cabal
June 3, 2009 @
10:18 PM
This 2005 Business Week This 2005 Business Week article predicted GMs ultimate demise with amazing accuracy.
Short term, I think it will depend on the details after emergence from bankruptcy, specifically their projected cost structure. If they’re able to substantially shed legacy costs, exhorbitant labor rates and 1st class benefits, they will buy time to implement a new business model. Of course, they will need a hardass upper management team able to make tough decisions without hesitation.
Long term, I believe their biggest challenge is overcoming customer perception of below average quality, especially in comparison to Toyota/Honda. Although they’ve made quality improvements in recent years, adopted Toyotas world class production system and imbedded Lean Principles throughout their enterprise, the fact remains the average consumer thinks their cars are not as reliable regardless of whether it’s true or not. It’s simply an amazing and invaluable business lesson that they continue to pay for their sins of the 80s when they peddled junk vanilla style cars coupled with horrible customer service. They lost that generation of buyers along with all subsequent generations, as the post 80s kids watched their parents migrate to foreign brand cars. To slow their death, they pursued fringe markets like fleet and offered financing specials resulting in little price realization and even played the “Patriot Card” rather than focusing precious R&D resources on appeal and durability improvement. I still remember laughing uncontrollably after seeing a Cadillac Cimarron parked next to a Chevy Cavalier in the late 80s. The two cars were essentially identical except for the nameplate and hood ornament, yet somehow they justified charging 50% more for the Caddy. Well that gravy train ended the second Lexus was born. The pursuit of high margin SUV/truck market in recent years was a reasonable move, and the Japanese companies thought so as well. Unfortunately the oil bubble came too quickly and no one was able to react with new product introduction. Lastly, I don’t necessarily buy the argument of low foreign labor costs as an insurmountable challenge to compete. As a hypothetical example, Tata Motor Co. in India must have a lower cost structure than Toyota. Even if they eventually build a quality reputation, produce and sell a reliable car at half the cost of a Corolla, will they take death dealing market share from Toyota ? I doubt it because they will never catch up with Toyotas aggressive and continuous innovation, appealing design, and ever improving technology.
June 2, 2009 @ 9:48 AM
I’m starting out with 5
I’m starting out with 5 years+
I think that GM failed because they make mostly lousy vehicles, and don’t know how to market the ones that are actually decent.
Now with the government mandating that they eliminate their most profitable cars (the ones they produce in China), and focus on high-cost, low-return vehicles like Hybrids, I don’t see how they can turn a profit.
All that eliminating their debt does is start the debt clock at zero again. This is like giving someone who just filed bankruptcy a brand new credit card with no limit. They’ll run up the charges all over again and have no way to pay it.
June 2, 2009 @ 3:01 PM
I put up to 5 years. I think
I put up to 5 years. I think they’ll want to get it off the books before the next presidential election cycle. Or at least be close to getting it off the books.
Whether that’s a good reason or not doesn’t matter. I just think the politics will dictate that the pol’s get the car company off the books before the election.
June 2, 2009 @ 7:54 PM
Yep, 3 years max. At three
Yep, 3 years max. At three years, the election cycle is in full swing and it needs to be off the books and a profitable deal for the government or it’s lambasting time.
June 2, 2009 @ 8:08 PM
I see it opposite way. There
I see it opposite way. There will be no recovery for the two BK automakers which means the politicians have to keep supporting them well past 5 years. Afterall, what politician wants to be responsible for all the job losses.
June 3, 2009 @ 8:48 AM
I voted 5 years, but I don’t
I voted 5 years, but I don’t see GM making it that long. Of course there will be more multi-billion dollar bailouts along the way before it finally gasps its last breath.
Josh
June 3, 2009 @ 10:18 PM
This 2005 Business Week
This 2005 Business Week article predicted GMs ultimate demise with amazing accuracy.
http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm
Short term, I think it will depend on the details after emergence from bankruptcy, specifically their projected cost structure. If they’re able to substantially shed legacy costs, exhorbitant labor rates and 1st class benefits, they will buy time to implement a new business model. Of course, they will need a hardass upper management team able to make tough decisions without hesitation.
http://www.heritage.org/Research/Economy/wm2162.cfm
Long term, I believe their biggest challenge is overcoming customer perception of below average quality, especially in comparison to Toyota/Honda. Although they’ve made quality improvements in recent years, adopted Toyotas world class production system and imbedded Lean Principles throughout their enterprise, the fact remains the average consumer thinks their cars are not as reliable regardless of whether it’s true or not. It’s simply an amazing and invaluable business lesson that they continue to pay for their sins of the 80s when they peddled junk vanilla style cars coupled with horrible customer service. They lost that generation of buyers along with all subsequent generations, as the post 80s kids watched their parents migrate to foreign brand cars. To slow their death, they pursued fringe markets like fleet and offered financing specials resulting in little price realization and even played the “Patriot Card” rather than focusing precious R&D resources on appeal and durability improvement. I still remember laughing uncontrollably after seeing a Cadillac Cimarron parked next to a Chevy Cavalier in the late 80s. The two cars were essentially identical except for the nameplate and hood ornament, yet somehow they justified charging 50% more for the Caddy. Well that gravy train ended the second Lexus was born. The pursuit of high margin SUV/truck market in recent years was a reasonable move, and the Japanese companies thought so as well. Unfortunately the oil bubble came too quickly and no one was able to react with new product introduction. Lastly, I don’t necessarily buy the argument of low foreign labor costs as an insurmountable challenge to compete. As a hypothetical example, Tata Motor Co. in India must have a lower cost structure than Toyota. Even if they eventually build a quality reputation, produce and sell a reliable car at half the cost of a Corolla, will they take death dealing market share from Toyota ? I doubt it because they will never catch up with Toyotas aggressive and continuous innovation, appealing design, and ever improving technology.