By on March 8, 2013

 

After part 1: Breach Of Trust,  and part 2: Lack of Strategy,  now the long-awaited final part.

In his book Car Guys vs. Bean Counters, GM’s best-known executive, Bob Lutz, describes the task facing newly-appointed CEO Dan Akerson:

“Akerson has inherited a company headed for success… Akerson does not have to “fix the business.” His role is not to run the operations but to set the overall direction, inspire the troops, and make sure the product development momentum continues… Akerson’s largest contribution could be to become the respected and liked spokesman, the personification of General Motors. Making GM more open, more human, more accessible and more likable is the last, great unfinished task.”

Lutz knows of what he speaks: after all, he was long the likable, humanizing public face of GM’s upper management. More importantly, he established the revamped product development system that has produced GM’s most competitive lineup in the modern era. However, Lutz knew and knows cars and the car business. Akerson knows how the telephone works.

Nobody, inside GM or out, has expected Akerson to radically reform GM’s core business; his only task was to provide a public face that inspired confidence in America’s automaker (Lutz offers Lee Iacocca and Alan Mulally as examples of auto executives who have played this role well). And yet, Akerson has not only failed to provide GM with a likable face, he has needlessly exacerbated public criticism of GM and inflamed internal divisions within the company.

Had Akerson taken Lutz’s advice, he would have focused on a few key issues: stabilizing GM’s executive ranks after Whitacre’s purges, supporting GM’s immensely talented product developers with the resources and respect they deserve, allowing PR messaging that supports attempts to revamp marketing, and distancing the company from its boot licking “Government Motors” stigma. Instead, Akerson ran his new marketing boss off for personal reasons (after he had been promised autonomy within the company), pushed his engineers into decisions with self-destructive results that he simply didn’t understand, put telecom cronies into positions they aren’t qualified for, promised to produce Volts in unsustainable (but political goal-supporting) volumes and inspired a wave of embarrassing leaks. In short, Akerson has managed to embody and amplify the product-ignorant, self-aggrandizing, morale-busting politics-over-market leadership that make up the worst stereotypes of GM managers, some of which may never have been true until the day Akerson took power. Lutz may have conquered the bean counters, but their destructive influence has been revived by the new telecom crowd. The bean counters knew the sometimes baffling mathematics of the auto business, the phonies know nothing.

This presents a fundamental danger to GM, if only because organizational culture begins at the top. But to make matters worse, Akerson is actively adding to the ranks of his loyalists, shutting out the profound expertise embedded in GM’s professionals in favor of sycophants and snake-oil dealing consultants. To be sure, the ranks of GM’s traditionalists still suffer from perennial turf battles, rivalry and misplaced loyalties; as a result, GM still needs a strong leader. But it needs a leader with credibility, both internally and externally. It needs a leader that knows when to push past parochialism but still knows when to trust the experts. A leader that understands his employees, his competitors and his customers.

Akerson’s profound disconnect with the business he is in, and thus the people he needs to work with him to make GM successful, is best encapsulated by his stated goal for the company. When Lutz was revamping GM’s product development program, and refocusing the company on the core of its business, the mission statement was adopted: “design, build and sell the world’s best vehicles.” Though simplistic, this motto provided GM with the kind of focus it had long been missing, not entirely unlike Mulally’s “One Ford” program, and it inspired a sea change in GM’s products. Now, not only is Akerson bashing his current portfolio of “aging” products, he has taken his eye off the ball by giving GM a new goal that seems ripped from the firm’s ignominious past: become the most valuable automaker in the world.

This uninspired non-goal can be met by any company. GM could declare victory tomorrow – as long as value is not measured by market cap.

This goal speaks mostly to Akerson’s shallow pomposity: having pushed himself into the top spot at GM without the first idea of what to do with the company, it makes sense for him to set a goal defined only by ambition. But it also displays his profound ignorance of the business: GM’s employees don’t need the “what” of a goal, they need the “how”… an insight that Lutz grasped and Akerson clearly does not. GM’s glorious past is inspiration enough, constantly reminding GM’s employees of the kind of market dominance that is possible. What GM needs is a leader who understands how companies develop ever-better products, how to earn the love of consumers by delighting them with quality and innovation, and how to compete head-to-head with the most fearsome global competitors.

Now that it is clear that Akerson is not that leader, now that he has lost the confidence of his employees and prospective customers, the question is “what comes next?” The answer: replace him as quickly as possible. Akerson’s predecessor, Ed Whitacre, has revealed that he nearly chose his head of North American operations Mark Reuss to be the next CEO, only rejecting him because of a perceived lack of seasoning. Instead of a young and experienced Reuss, we received an old an inexperienced Akerson, who, frankly, looks and acts older than he is.

Reuss commands respect within General Motors and the automotive community and the media at large. With a background in engineering and product development he is, more than anyone else at the top of GM’s management, the heir to Lutz’s product revolution. Meanwhile, whatever advantage Akerson’s age supposedly gives him has yet to produce a single notable accomplishment.

Despite his profound failures of both strategy and execution, Akerson has not yet fundamentally crippled GM. It remains chock-full of talent, it is well-positioned in various important global markets, and it is on the cusp of dramatically rehabilitating its reputation for uncompetitive product. In short, like Akerson himself, Reuss would be inheriting a company with a lot of things going for it. The key is reviving the company’s self-confidence and image with the public, tasks that the youthful and relatable Reuss has proven his ability at. But most importantly, the key is getting Akerson out before another crucial product launch is botched, before another strategically unwise investment is made, before GM’s reputation and unity is finally destroyed, turning GM into America’s Opel.

Part 1: Breach Of Trust. Part 2: Lack of Strategy.

Editor’s note: Renaissance_Man is a nationally and internationally known industry analyst who prefers to remain anonymous

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77 Comments on “The Case Against Akerson, Part 3 of 3: Loss Of Confidence...”


  • avatar
    mike978

    Great series of articles and well done to TTAC for getting them.

    They are all summed up by this great line “Akerson knows how the telephone works.” He had no business being in charge of a large engineering company without any engineering expertise, knowledge or experience.

    Now it is upto the shareholders to remove him.

    • 0 avatar
      NormSV650

      I don’t think it as a engineering or manufacturing company but one that must thrive between government regulations much like a telephone company.

      Someone thinks GM is a good bet:

      http://content.usatoday.com/communities/driveon/post/2012/05/warren-buffet-buys-10-million-shares-of-gm/1

      • 0 avatar
        mike978

        I agree that you need someone who can work in an environment with plenty of Government regulation, but most businesses have that. Boeing is a great example – there are plenty of regulations and Mulally came from a world where he had to cope with those regulations and manage a large, complex manufacturing business. Telecoms are comparatively simple by comparison. And with much shorter timelines.

        • 0 avatar
          George B

          I would argue that Dan Akerson doesn’t even understand the phone business going forward. He comes from an era where the focus was on billing by the minute for phone calls on a circuit-switched network with higher prices for “long distance”. The internet and VoIP have killed that business model.

          The business of producing expensive individually owned hardware like cars is very different than the business of selling phone service. If you’re unhappy with your phone service, you can change carriers relatively inexpensively. Paying extra for ATT or Verizon doesn’t buy much status over T-Mobile or Sprint and having an expensive land line adds none. In contrast, buying a less desirable car like a Malibu sends a distinctly negative social message implying that you’re less successful or kind of stupid. A car manufacturer that fails to at least try to compete with the leaders of a car category becomes the rental/subprime model.

          Dodge Stratus Dad http://www.youtube.com/watch?v=9YD_1ObUrhE

          Al Bundy Dodge Dart http://www.youtube.com/watch?v=-KnvrBmhUmE

        • 0 avatar
          ect

          I respectfully disagree. In every industry I have been a part of, I’ve encountered the people who say “if you haven’t spent XXX years in this industry, you can’t understand it.” They’re always wrong.

          The CEO’s most fundamental job is leadership. That is, to spearhead the definition of corporate strategy and communicate it throughout the organization. The lower ranks implement it.

          GM, Ford and Chrysler (along with every other major automotive company) all have many talented people in their ranks. Executive leadership is what makes the difference.

          In many cases, a “fresh set of eyes” is a good thing. Neither Alan Mulally nor Sergio Marchionne grew up in the auto business, but they came with the “right stuff” to make a huge difference at Ford and Fiat (plus Chrysler), respectively.

          GM has long suffered (as did Kodak, Polaroid and AT&T) from a very insular management culture. I would argue that this was a very significant factor in their decline into bankruptcy – the problems grew over a very long time, and outside observers could see them coming, but internal management remained locked in the “space warp” they defined for themselves, undisturbed by fresh eyes and fresh blood. Much like the folks who rely on Rush and Fox as their source of “news”, and so convinced themselves that Romney was bound to win the presidency, even though the polling data consistently showed otherwise.

          Whiteacre and Akerson had the opportunity to change the culture at GM. Apparently, they did not. In the face of steeply declining gross margins, descent into operating loss, and continuing loss of market share in North America, GM execs continue to pretend that nothing is wrong and everything is rosy – just as they did in the 30 years prior to bankruptcy.

          I wish it were otherwise, but reality is a b***h.

    • 0 avatar
      stingrayjim74

      Interesting piece. if only reporting were this hard hitting more often.

      [img]http://media.gm.com/content/Pages/news/us/en/2010/Aug/0812_transition/jcr%3Acontent/rightpar/sectioncontainer_0/par/image.img.jpg[img]

  • avatar
    Sundowner

    when this series started, I had a feeling it was going to wind down with a rah-rah commercial for a suggested replacement.

    If you’re going to even venture down that path (arguably a perilous path away from objective journalism) you might as well at least make a pass at an as-objective-as-possible 2-parter on prospective replacements any why they’d be good at the job.

    • 0 avatar
      mike978

      Your suggestion makes sense, although this article does cover some of Reuss’s positives.
      I think the series could have easily been criticized if they offered no suggestions as to who should take over.

  • avatar
    Chocolatedeath

    And the beat goes on.

    • 0 avatar
      OldandSlow

      Which makes me want to buy a Plymouth.

      http://www.youtube.com/watch?v=KCUWU3sbfrU

      • 0 avatar

        And here’s the Spanky & Our Gang “Sunday Will Never Be The Same” version for 1969…

        http://www.youtube.com/watch?v=du4__WVjU1g

        http://www.youtube.com/watch?v=4Ik_JUw3NMw&feature=endscreen&NR=1

        GM’s road to today began in earnest in 1958 when Frederic Donner became chairman, the first non-car guy to achieve that position in GM.

        I guess you could argue that it worked for awhile but one has to wonder what the 1960 Corvair and 1971 Vega might have been like if the car guys had had the final say instead of the bean counters. What if the X’s, J’s and W’s were designed and built with the same standard of excellence Ford put into the 1st-gen Taurus.

        These events from 20-50 years ago apply to the current situation because that same culture still exists. Unless and until that culture either changes or can be properly managed, Anyone running GM will have a double task…

        1) Design and build the World’s Best Vehicles
        2) Keep the entrenched culture from gumming up the process.

        • 0 avatar
          rnc

          “GM’s road to today began in earnest in 1958 when Frederic Donner became chairman, the first non-car guy to achieve that position in GM.” It was actually a revolt in terms, Donner immediately began bashing his predicessor and then began the final abandonments of the Sloan system (i.e. executive management was supposed to be located in NYC, so that they would always have the pulse of what the market wanted), the sarcophicas of Detroit just made that issue an order of magnitude worse. Sloan – Car guy always #1, finance guy #2, donner turned that on its head…short term financials over product, etc. but I think these facts are well known.

        • 0 avatar
          danio3834

          “What if the X’s, J’s and W’s were designed and built with the same standard of excellence Ford put into the 1st-gen Taurus.”

          Not sure if joking.

          • 0 avatar
            corntrollio

            They definitely weren’t joking. Ford put a significant amount of investment into the 1st gen Taurus and made it a best seller. There are books about this.

            GM sort of did that with Saturn, but at some point stopped the investment.

          • 0 avatar
            danio3834

            The Taurus was an appealing car at the time but wasn’t without it’s foibles either.

            GM invested a lot with the X cars and they sold fairly well too.

          • 0 avatar
            corntrollio

            Sure the Tauruses weren’t perfect (although mine did quite well), but you still can’t compare GM’s investment into the X-bodies with Ford’s investment into the 1st-gen Taurus.

          • 0 avatar
            bnolt

            Both Donald Peterson (an exec who knew what he was doing) and the Taurus had a large role in turning Ford around. They weren’t in good shape back in the early 80s. Taurus, Thunderbird, Escort (laugh if you must). Compare and contrast: Citation/Celebrity, Corsica/Beretta, Chevette. Yea, GM sold a lot of those, but not many folks came back for more.

          • 0 avatar
            rnc

            At one point in either 80′ or 81′ ford has less than $300 million in operating cash on hand, from that to the most profitable automaker in the world ten years later. Perhaps the best contrast to GM to be used.

          • 0 avatar
            golden2husky

            No joke. Yes the Bull had an at best middling interior and a marginal transmission. And first year reliability was not good enough, though it was much better in all those regards than the X’s. But it was forward thinking, with distinctive styling that set the stage for the aero look on modern cars. It was a thoroughly modern design and it got most of the key engineering right. And despite those teething problems, the platform was durable as many of them became high mileage examples. Had GM done so well with the X’s the year 2008 might have been quite different. Of course, had the Taurus had reliability near that of an Accord, well Ford would likely still own PAG…

  • avatar
    rpol35

    I’m not so bothered by Akerson as I always thought he was an interim chief, someone to guide the company through the IPO and final government sale of their shares, especially considering his private equity background at Carlyle. I still believe he’ll be gone when the Treasury sells out their remaining share.

    I must admit however, that it is amazing how quickly he has fallen into the old entrenched GM managerial way, it’s like a virus that can’t be killed.

    Oh, and to his perceived lack of engineering experience, he did graduate from the U.S. Naval Academy in 1970 with a bachelors degree in engineering. Academic?, yes, but it is no slouch of a degree or an institution from which to have an academic engineering background.

    • 0 avatar
      rnc

      Yes but as opposed to Mulally, who oversaw some of the most complex, time consuming, integration and production issues in the world overseeing Boeing’s commercial (not to mention planning, getting a car wrong and having a mid-fresh cycle to refresh, when you are building planes designed to last 30+ years, not something a quick refresh could fix) . There is a difference b/t having an engineering degree, that wasn’t used in an industrial setting and Mulally who achieved so much as president of Boeing commercial, that they company just assumed he wasnt going anywhere, until he did.

      • 0 avatar
        rpol35

        rnc:

        I agree with you but was countering mike978′s comment that Akerson is, “without any engineering expertise, knowledge or experience.” His statement is simply not true.

        • 0 avatar
          mike978

          rpol35 – I was unaware that his degree was in engineering so I stand corrected. But rnc makes a very valid point that other CEO’s has real world practical experience that was also recent not 35-40 years old. I have a Chemistry degree but 20 years later have forgotten most of my organic chemistry, such that I probably wouldn`t be a good choice to run a synthetic chemistry business.

  • avatar
    OldandSlow

    A well written series, much of which has been said before here and there.

    “What GM needs is a leader who understands how companies develop ever-better products, how to earn the love of consumers by delighting them with quality and innovation…..” which is what Alan Mulally has been trying do at Ford with far less public drama.

    • 0 avatar

      Yeah re-badging a Fusion into a Lincoln MKZ is very innovative, not to mention the LACK of quality…

      • 0 avatar
        28-Cars-Later

        While I agree its a pretty weak move by Ford, GM is the king of the rebadge.

        • 0 avatar
          CJinSD

          Shouldn’t VW get an honorary mention? They took an unsalable $60K VW and badged it into a thrice as expensive trust fund trolley. Imagine if people had lined up for Cimarrons while Cavaliers languished on dealer lots, and you’d have a parallel to Piech’s understanding of inherited, tasteless and uncultured wealth.

        • 0 avatar

          More like WAS the king. Besides the Silverado/Sierra twins the GM re-badges are all gone.

          Every Lincoln has a Ford variant…

          • 0 avatar
            Loser

            Isn’t the complete GMC lineup all re-badged Chevy’s? The Escalade is also a re-badge.

          • 0 avatar
            CJinSD

            They rebadged the Daewoo Lacetti as the Chevy Cruze and Buick Verano, they rebadged the T300 Aveo as the Sonic in the US and Holden Barina in Australia. They rebadged the Opel Insignia as the Buick Regal in the US. They rebadged the Daewoo Matiz as the Chevrolet Spark. I’m sure there are some CUVs that have been rebadged too, but there’s evidence that GM still lets marketing repurpose cars. I suppose that you didn’t know about any of these rebadges while having a Chevrolet avatar suggests that GM is the absolute king of rebadging now, in that they’ve learned to hide it from their customers, at least the ones that don’t want to see it.

          • 0 avatar

            GMC Terrain = Chevy Equinox??
            GMC Acadia = Chevy Traverse??

            They may be on the same platforms but they are far from re-badges.

            Escalade is definitely, forgot about that one.

          • 0 avatar
            CJinSD

            I had my day dinged by Ford quality and engineering only yesterday, but the Lincoln MKZ is at least as differentiated from the Fusion(which I abhor) as a Terrain is from an Equinox. It is actually far more differentiated, having powertrain options that don’t mirror the Fusion’s. Your definition of a rebadge is mighty elastic.

          • 0 avatar

            Daewoo? Really? They are not even a car company anymore. The remainder of the company became GM Korea last year…

            The new Lacetti was developed from the all new Cruze architecture.
            Sonic shares exactly zero parts from the old Aveo and is on a brand new platform.
            Matiz hasn’t been built since the 2009 model year and shares nothing with the Spark.
            Opel Insignia was re-badged as the Regal here for a short time, now it is built in Oshawa.

            I work at GM, thus the avatar, and the knowledge…

          • 0 avatar
            CJinSD

            Google the 2008 Daewoo Lacetti and then explain to me how that car was created from the 2011 Chevrolet Cruze. If GM has time travel mastered, they are not making the most of it.

          • 0 avatar

            Cruze launched in Korea before the U.S. version.

            “GM in 2008 introduced the Cruze compact car, carrying the “J300″ internal designation.[11] This J300 iteration serves as a replacement for the Chevrolet Cobalt and Daewoo Lacetti—both unrelated cars.”

          • 0 avatar
            BrianL

            @CJinSD
            The Buick Verano is much closer to the Opel Astra than the Chevy Cruze. The Verano and Cruze share the same platform, but they are not even close to being a rebadge.

            But, rebadges really only matter in the same market. Does anyone care if the Opel Insignia and Buick Regal are the same car if they aren’t sold in the same markets?

          • 0 avatar

            Hey TCBRacing,

            Badge or re-badge, Daewoo or no Daewoo all I want to say is that Gm Brasil has the best line they’ve put out since the early 90s. As the Opel based Brazilian Chevies languished forever, they largely became irrelevant. Now, with the Korean based Brazilian Chevies you have winners. That platform underpinning the Sonic and all new Brazilian Chevies is a winner. Quiet and roomy, Chevy cars have become comsfortable and desireable again. Here in BRazil, the traditionalists are all bemoning and the internet is wailing against the cars, but the consumer is buying all that GM can produce very happily and are satisfied (something the traditionalist forget how actual buyers always complained of the Opel-BRazil Chevies. Cobalt, Onix, Spin all winners. Cruze sedan and hatch too. The Sonic soens’t sell cause it’s too expensive and for the price there are better options. s10 is outclassed too by Ranger and Japanese. Agile, Montana, Celta and Classic have got to go though. Pass that info on to your boss, sir. GM in Brasil has come a long way, but they’re halfway there.

            I’ve said this before but for the firt time in my life I can recommed Cobalt (over Logan – my car -, Siena and Versa), Onix over Palio, Gol, Uno, HB20, Etios, Sandero, and Spin over Livina and SpaceFox. The others I can’t recommend over the competitors. But for the firt time in my life I can recommend Brazilian Chevies over their rivals. That is something I nver thought I’d do in my lifetime.

          • 0 avatar

            Thanks for the words of encouragement Marcelo. Unfortunately Brazil was neglected for a long time. It is great to hear that the effort we have been putting there is seeing some rewards! It makes me glad I work for GM!

        • 0 avatar
          CJinSD

          BrianL, it matters to Buick customers, when they are completely unable to relate to the Insignia no matter what it is called here.

          TCBRacing, I told you how to find a plethora of five year old photos of the two year old Cruze wearing Daewoo Lacetti badges. Claiming that the Cruze replaced the ‘unrelated’ Lacetti isn’t doing either of us any favors.

          • 0 avatar

            I already answered your question CJ, the Cruze was launched in Korea (with Daewoo Badges) originally in 2008 and in the U.S. in 2011. It does not take away the fact that it does not have anything to do with the last generation of the Lacetti.

            The claim was not mine (thus the quotes) but from Wiki…

        • 0 avatar
          OldandSlow

          In a perfect spread sheet, power point world every manufacturer would like to make 1/2 their profits off a repackaged premium brand – even though the premium brand sells significantly less units.

          I’m surprised no one mention the Buick LaCrosse and Chevrolet Malibu sister ships. Does the LaCrosse buyer even know or care that both cars share a similar platform? – Do note that the LaCrosse uses the long wheel base Epsilon II platform versus the SWB Epsilon II on the Malibu.

          Badge engineering, a.k.a repackaging is here to stay. GM does a better job differentiating Buick from Chevrolet than Ford does with Lincoln in my opinion.

      • 0 avatar
        corntrollio

        Last I checked, Lincolns were doing quite fine in quality rankings, and Fords are about average. Has that changed? For example, a recent on-point TTAC post:

        www dot thetruthaboutcars dot com/2013/02/toyota-beats-gm-74-in-j-d-power-dependability-study-volkswagen-decimated/

        • 0 avatar

          Last I checked, every single MKZ had to go through some kind of special “Quality Check” at the Flat Rock plant…

          http://www.autonews.com/apps/pbcs.dll/article?AID=/20130304/OEM01/303049960/lincoln-may-extend-mich-mkz-inspections#axzz2MzAsnwj7

          • 0 avatar
            OldandSlow

            The Lincoln MKZ really needs to be assembled in the US, period. The idea of shipping vehicles built in Hermisillo, Mexico to a plant in Michigan for final inspection and adjustments sounds like a “Charlie Foxtrot” situation.

      • 0 avatar
        bnolt

        It needs a larger, more gaudy emblem on the grill. That’s what sells cars today!

      • 0 avatar
        Steve-O

        TCB, your definition of ‘re-badge’ is very, very loose. The ’13 MKZ is certainly no “re-badge” of a Fusion. Platorm-mates, yes.
        They share NO body panels, no glass. They have differing suspension and top-line engine options. Even details like the windshield wiper arrangement are totally different designs (the Fusion has symmetrical wipe, opposite-facing arms).

        It would have been a hell of a lot cheaper to “re-badge” the Fusion (like they did with the previous-generation MKZ) than totally re-engineer a new body, interior, ‘Lincoln Drive Control’, targa roof, etc…

        • 0 avatar

          You’re right, it was a stretch ;-)

          However if you look at Cadillac (except for the Escalade) all of their models are unique without another brand variant.

          The whole re-badge definition has totally changed from the days when Time put 3 different brands of the same car on the cover and they all looked exactly the same. The days of changing a Grille and some tailights to try and fool the customer into thinking they are getting something different are gone. GM did have some of the worst (every Pontiac a few years ago) but like I said, they are (mostly) gone.

          • 0 avatar
            Steve-O

            Agreed. It’s obvious that GM has put much, much more money into Cadillac than Ford has allocated to Lincoln. I don’t think Mulally is willing to take too big a bet in such a crowded field. Its a financially prudent decision but I doubt it will give Lincoln the funds they need to have a dedicated platform to use.

        • 0 avatar
          corntrollio

          Funny how no one makes Steve-O’s point on Lincoln-related threads, even though it’s a pretty good one.

      • 0 avatar
        OldandSlow

        Badge engineering / repackaging to provide products to support multiple brands is a necessity in the auto industry. If done correctly, the practice can be very profitable.

  • avatar
    Dirk Stigler

    “GM’s glorious past is inspiration enough, constantly reminding GM’s employees of the kind of market dominance that is possible.”

    With respect, that kind of market dominance is no longer possible – for anyone. GM is never getting back to over 50% market share in the US. That’s not GM’s fault, it’s just the reality of the marketplace today. But it does get to one of old GM’s worst problems – failure to realize (or maybe just to accept) that it’s not 1953 anymore and that they are starting from near-zero in terms of consumers’ confidence in their product.

    GM didn’t and doesn’t need a halo product like the Volt. They need to work their way up the ladder like Hyundai. Sure it’s embarrassing to admit, but not as embarrassing as being bankrupt again just a few years after the big bailout.

    • 0 avatar
      redmondjp

      Yes – the most important thing that GM needs to do is to halt their straight-line market share decline. Even getting that slope to zero would be a huge success.

      Otherwise, they will be right back in bankruptcy in another few years, after which they will likely halt car production in North America to focus on trucks and SUVs (while maintaing car plants in other countries like China).

      There are erie parallels with the City of Flint (birthplace of GM) – it had an emergency manager (EM) back in 2002-04 who turned things around. Then, political business as usual resumed, and they are back to EM Round II.

    • 0 avatar
      rnc

      And remember Opel once had 40% of the western european market place.

  • avatar

    A good series. I don’t agree with all of it — I have a *somewhat* less dim view of what has happened since 2009 — but it’s well written and well argued.

    I do agree that GM’s board could do MUCH worse than handing the keys to Reuss ASAP. I would love to see that happen, but I am not holding my breath.

    I remain hopeful that GM will continue to gather steam once the Feds have sold their stake and cast off the last restrictions, but I have been hopeful for a lot of things re GM since 2010, and have been disappointed more often than not. Time and investor patience are not running short yet, but they will.

  • avatar
    DC Bruce

    Here’s the problem with Akerson in two words, he’s a “bellhead.” “Bellhead” is the term people in the telecom business use to describe the products of the old “Bell System,” the integrated local and national telephone monopoly. These folks know nothing about getting and retaining customers; in their formative years, the customers had no choice. What they do know is how to manage the government that regulates them: in the old days, the Bell System’s rates and services were pervasively regulated at the national and state level. Job 1 for a Bell executive was making sure that the local regulators allowed them to charge high prices, so the company would make lots of money, and to do it in a way that concealed the true return on the company’s investment, so it would not appear to be “over-earning” within the rate-of-return rate regulatory framework under which the company had to operated. The Bell System did not have to be concerned with its customers; it had to be concerned with its shareholders, the proverbial “widows and orphans” who expected a steady flow of dividends from its stock; and it had to be concerned with the governments which regulated how much money the Bell System could suck out of its customers.

    For the most part, innovation was a bad thing at the Bell System; and whatever innovation there was had to be introduced slowly so as not to diminish the value of the company’s current investments in plant, equipment and service — just look at the price of an ISDN line, even today.

    Indeed, no one at the Bell System had any idea of how successful . . . and eventually disruptive, cellular telephone technology would be.

    The Bell System was also a cradle-to-grave bureaucracy: people entered at the bottom and left when they retired.

    Given the heavy regulation of automobiles today, one could make a case that a car company CEO would need to have experience in dealing with the government. But, the fact is, that the Detroit 3 in many ways did resemble the old Bell System; they didn’t have a monopoly, they had an oligopoly (a shared monopoly) and, after Ralph Nader and the whole safety movement, followed by the fuel economy movement, their principal client was the US government — which they also used to protect themselves from foreign competition.

    So, it’s no wonder that Akerson fits in with the old corporate culture at GM. Of course, it was that culture that led to GM’s bankruptcy; so it’s hard to be optimistic about the future.

    • 0 avatar
      corntrollio

      “For the most part, innovation was a bad thing at the Bell System; and whatever innovation there was had to be introduced slowly so as not to diminish the value of the company’s current investments in plant, equipment and service — just look at the price of an ISDN line, even today.”

      I ran across some elderly types at various points who were still renting phones from one of the Baby Bells for ungodly monthly rental fees for way too long, well after most people would have bought their own phone. Unbelievable how much they spent on those POS phones.

      • 0 avatar
        DC Bruce

        The Bell phones were massively overbuilt, and very expense. They went into the rate base, on which Bell received a return. Simple math: if your rate of return is 8%, would you rather get 8% on a $50 phone or 8% on a $150 phone, when the customer has no choice but to take whatever instrument you offer?
        ;-)

      • 0 avatar
        golden2husky

        Those Bell System phones were built to a standard that today’s phones can’t begin to even dream about. I just replaced my Panasonic cordless phones after 5 years of modest use because the keypads began to fail. Bell phones can remain in service for 40 years or more. Yeah they didn’t have much in the way of features, but I can’t think of a single product today that is made half as well.

    • 0 avatar
      nikita

      “We don’t have to care. We’re the phone company.” -Ernestine

  • avatar
    european

    trying so hard to badmouth akerson then offering reuss as a replacement, i conclude that

    Renaissance_Man = reuss’ mother. case closed.

  • avatar
    Domestic Hearse

    Mark Reuss sure can write, I’ll give him that.

  • avatar
    Lorenzo

    Akerson hasn’t produced a brown, RWD, V8, manual transmission wagon, so I have to agree with the editorial.

  • avatar
    Adamatari

    Funny how you preface a hit piece on this guy with fawning for Bob Lutz, who ran GM into the ground in the pursuit of cars HE would like to drive. Sure, the Solstice was neat, but it was a niche car for a niche market. On mainstream vehicles Lutz has a much less rosy record.

    Mulally I have respect for, but Lutz is all ego. Great for making halo vehicles, useless otherwise.

    • 0 avatar

      spot on about Lutz.

      • 0 avatar
        mitchw

        So then the book Lutz wrote about how van Wagoner hired him to reorder the way GM made cars, from an adherence to ancient internal rules that ignored the customers, was just blowing smoke? He spent a near decade squeezing out a couple of cars and now takes credit for all that is good? Persuade me, please.

    • 0 avatar
      86er

      I was going to joke that Lutz wrote the piece, because I have never seen

      “Lutz knows of what he speaks…”

      on TTAC before.

    • 0 avatar
      Lorenzo

      Back in the day, GM knew how to leverage a halo vehicle into great selling mass market models. They would have put a Solstice-look front end and a few other details on a compact or midsize sedan or coupe and market the hell out of it. You need a Lutz type to come up with the halos, but leave it to others to build on them. Unfortunately, Lutz was in charge of the “others” too.

      • 0 avatar
        AFX

        GM has had a lot of halo cars over the years. The Buick GNX, the GMC Syclone and Typhoon, the Chevy SSR, the Soltice and Sky, the Pontiac GTO and G8. All of them pretty much went nowhere.

        Halo cars won’t save a company when your bread and butter cars are crap.

    • 0 avatar
      AFX

      “Sure, the Solstice was neat, but it was a niche car for a niche market.”

      I guess that niche market was for people who didn’t require luggage space, or an easily operated soft top.

      • 0 avatar
        afedaken

        Speaking as a Solstice owner, I alwayts wondered where all the top complaints came from. Pop the trunk. Pull the latch. Stow the top. Close the trunk. It’s not a difficult procedure.

        But you’re right on with the luggage space. :-( Suspect my next will be a Miata or worse yet, something with 4 doors.

    • 0 avatar
      28-Cars-Later

      I thought I read Lutz did green light the previous gen Malibu, which sold well and even won awards, was I mistaken?

  • avatar
    50merc

    The evil done by the niche car flops wasn’t restricted to their failure to attract buyers. Developing a new model is enormously costly. So gigantic pots of cash were diverted from, say, refining Impalas up from rental fodder. How many Silverado pickups had to be sold just to pay for the SSR? How many profitable Sierra sales were offset by the Solstice financial black hole? Did the Reatta debacle produce even one more customer for LeSabres and Park Avenues?
    You have to wonder if many models were OK’d for production just to protect the jobs of GM’s huge management and hourly workforce. In other words, busy work.

  • avatar
    Pig_Iron

    I pity the next guy who takes over from Akerson. I hope GM isn’t on the cusp of the big slide. With the scheduled closure of Oshawa in 2016, and the push to lobby for the Trans-Pacific Partnership trade treaty. It looks like Beijing is the tail that wags the dog. That together with the across the board market share decline… And how much blood and treasure did they blow on the Corvette and it’s push-rod V8? Where’s the youth market cars? Where’s the wagons? Where’s the FWD coupe with stick for the enthusiast who wants to enjoy driving year round in snow or shine? Everybody and their brother makes a grey slush-box sedan appliance, so what differentiates GM – other than three decades of swift decline?

    • 0 avatar

      - Oshawa Plant Closing – Eliminating extra capacity and shifting production to Michigan – WIN

      - The Trans-Pacific Partnership (TPP) is a free trade agreement being negotiated between the United States and 10 other Pacific-rim countries: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam (possibly Japan if they get their way) – NOT CHINA – FALSE INFORMATION

      - Corvette takes no more Engineering and Development costs than any other vehicle, and then you imply that it should have something other than the (inexpensive) push rod V8 – SPIN

      - Youth Market Cars – Sonic (2nd best selling B-Segment behind the considerably cheaper Versa and selling more than the Yaris and Fit combined). Spark – blowing away sales of the Fiat 500. Camaro – outselling the Mustang… – WIN

      - Wagons – Sell like crap, hence the discontinuing of wagons in the US Market by every major automaker including VW. – SPIN

      - FWD Performance Coupe – What, like a Scion TC, Golf GTI, Veloster? Yeah there is a real sales juggernaut, GM could really save the corporation with this segment… – FAIL

      More like 3 years of increased competition. Yeah GM fell asleep at the switch when they had the world by the horns up until the 90′s, but with a new emphasis on great (and well recieved) product, the slide has stopped. With 75% of the fleet getting refreshed, the market share should stabilize and margins (the real sign of success) will continue to rise.


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