The beginning of the end or the end of the beginning?

I don't know how many shoes have yet to drop for General Motors.

But the changes announced yesterday - massive cuts in jobs, more plant closings, the elimination of dealerships and the dropping of the Pontiac brand - are all necessary if not sufficient responses to the New Reality.

As much as the domestic car makers complain that the main reason for their plight was
(and remains) short-sighted government policies which penalize older companies by saddling them with the legacy costs of pension and medical benefits - to which I largely subscribe - it's that old "up to your assets in alligators" thing.

Yes, your original objective was to drain the swamp.

But first, you gotta survive.

So now GM, Chrysler, and, to a lesser extent, Ford, have to do whatever they can to keep the alligators at bay.

Pontiac was doomed. From its heyday with the GTO in the 1960s, it really hasn't established much of a presence.

Other GM brands are also heading to dinosaur-land.

SAAB and Hummer are for sale, but nobody wants them.

GMC as a stand-alone truck brand never did make a lot of sense to me although their marketing people claim their sales are at least partially incremental over what they could do with Chevy badges on otherwise identical vehicles.

Buick would be a target too, except for a massive presence in China (the old emperors used to drive Buicks, and the cachet has survived six decades of Communist rule).

Saturn started off as a bold idea, but had morphed into a domestic name for GM's foreign cars. But Chevrolet can do and is doing the same thing- Malibu = Aura - so there seems little need for Saturn any more.

That leaves Chevrolet at the bottom, Buick in the middle, and Cadillac at the top, which is probably all GM really needs.

Toyota does just fine with three brands (Toyota, Lexus, Scion). BMW does just fine with two (BMW and Mini). Why does GM need seven or eight?

As for dealer networks, Canada has shown the way for decades, by combining (for example) Pontiac and Buick and, in the old days, Chevrolet and Oldsmobile.

The dealer network simply has to be consolidated further, and that will continue.

None of this is going to easy.

The US government could also do a lot more by setting an energy policy with closer-to-world fuel pricing so car makers could plan to build fuel-efficient cars in response to real demand, instead of being forced to build cars nobody wants - which, as long as gasoline is free, they don't.

I'm not holding my breath.

Comments

[oilers84]

Hey Jim what do you think of Chrysler effectively breaking the CAW & their pattern bargaining? Should GM be able to go back to the CAW now & demand the same deal that Chrysler got?

[Jim]

Hi ddonohue:

As today's post indicates, the scene is changing so rapidly it's hard for anyone to keep up.

I have long been on record that the union workers made a deal, and due to a variety of circumstances essentially beyond anyone's ability (or willingness) to control, that deal has been abrogated.

But it seems those people who had their lives nicely planned around a financially secure retirement (I screw fenders onto Chevvies or Dodges for 30 years; you put titanium hips into me and my children for life) now have those plans in tatters.

Those who did NOT make that deal - like me - really have nothing to complain about. I wouldn't have screwed fenders onto Chevvies OR Dodges for thirty days. Heck, I turned down not one but TWO chances at a multi-million dollar pension plan so I could write about cars!

But neither the general public nor the various governments (who caused the problem in the first place) seem to share my sympathy, and it looks like everything is now on (or, more to the point, off) the table.

Whatever happens, it isn't going to be pretty.

Jim