The Truth About Cars » General Motors Zombie Watch

GM Zombie Watch 20: IPO Or Bust

Edward Niedermeyer — Mon, 16 Nov 2009 22:12:23 +0000

GM’s first post-bankruptcy financial data has arrived, underscoring in red ink the folly of the government “investment” in the shambling zombie once known as General Motors. Bankruptcy-driven improvements in cost structure have not prevented GM from turning a non-GAAP-certified loss since emerging from Chapter 11, and GM is already warning that 4th quarter results will [...]

General Motors Zombie Watch 19: You Get What You Don’t Pay For

Robert Farago — Thu, 22 Oct 2009 16:43:47 +0000

OK, so, GM is a nationalized automaker. I know, I know: nationalization is for third world dictators. But there it is. Thanks to outgoing president George Bush, the feds used $50 billion from the Troubled Asset Relief Fund to bail out General Motors, in exchange for majority ownership. So no matter what W's political successor says about his administration's "hands off" non-management of Government Motors, he who owns the gold makes the rules. And when it comes to running a federal-funded organization, Uncle Sam plays by different rules than, say, any private enterprise extent. The bottom line is that there is no bottom line. Amtrak, the U.S. Postal Service, Medicaid---they're all run at a tremendous, ongoing loss. Which means there's zero sense of accountability. Which means they will never, ever be able to fully and fairly compete with privately held corporations. Why should GM by any different? Answer: it isn't.

General Motors Zombie Watch 18: Hire Buickman

Robert Farago — Sun, 18 Oct 2009 15:59:42 +0000

Back in the day, GM really pissed me off. As the American automaker continued its inexorable slide into bankruptcy, executives, analysts, journalists, loyalists and camp followers scoffed at the prospect of disaster. Their scorn fueled my anger or, as Angus Mackenzie would have it, pompous indignation. When the feds bailed-out and then nationalized GM, the company's refusal to overhaul (keelhaul?) its executive "talent" kept my ire alive. A few months and $50b-plus dollars later and I'm rapidly approaching the point where I couldn't give a NSFW. How many times can you sing the chorus of "Where have all the flowers gone?" without saying FTS and cranking-up the MC5? Before I abandon this pursuit entirely, one last gasp . .

General Motors Zombie Watch 17: May the Best Automaker Win

Robert Farago — Fri, 11 Sep 2009 17:46:01 +0000

General Motors is a nationalized automaker. But it can't stay that way forever. Its federal taskmasters have decreed that GM must return to public ownership before the Congressional mid-term elections, in 2010. Makes sense. If GM is still on welfare at election time, GM will be an enormous political liability. A symbol of Big Government gone bad. But GM can't possibly achieve profitability within that time frame. Even if it had the brains, it doesn't have the time or money to build what needs building, to fix what needs fixing. The new car market sucks and GM's product planning, reputation and branding are in tatters. So New GM's doing the only thing they can do: putting lipstick on the product pig and sending it off to market. This "May The Best Car Win" advertising strategy will backfire. Badly.

General Motors Zombie Watch 16: The Russians Are Coming!

Robert Farago — Tue, 08 Sep 2009 14:01:28 +0000

Ron Bloom is a Harvard MBA grad, investment banker and former advisor to the U.S. Steel Workers. He's also the head of the Presidential Task Force on Automobiles, now that Steve Rattner is busy defending his investment firm against bribery charges. Over the weekend, the Obama administration has added Manufacturing Czar to Car Czar in Ron Bloom's portfolio of power. "Bloom is to work with government departments including Commerce, Treasury, Energy and Labor to develop new initiatives affecting the manufacturing sector. The White House said Obama is committed to partnering with the private sector to spur innovation, invest in the skills of American workers, and help manufacturers prosper in global markets by promoting exports." In other words, after nationalizing GM, Obama's mob are now looking to screw-up all the other parts of America's manufacturing base. A quick joke . . .

General Motors Zombie Watch 15: Volt Jolt for Dolts

Robert Farago — Fri, 04 Sep 2009 20:47:50 +0000

It's been a while since I've written a General Motors Zombie Watch. Time keeps on slipping, slipping . . . into the future. Only when you're dead, there is no future. You're dead. Oh, I know: New GM's got new plans for new cars with new advertising that will win new (old?) customers. And the new Board of Directors' Chairman Ed Whitacre is busy threatening to fire New GM's old (new?) execs if they don't get their shit together. But they haven't, as their farrago of product plans and the botched launch of the new Buick LaCrosse proves. In fact, the current crop of GM suits will be fired. And?

Editorial: General Motors Zombie Watch 14: 2012 Lineup

Edward Niedermeyer — Thu, 13 Aug 2009 02:27:42 +0000

General Motors has always been long on talk about the future. The company that invented concept cars and pioneered planned obsolescence has always kept consumers focused on the next big thing(s), and that tradition is ever more important now that GM is a publicly-owned entity. Future products are the justification for current investments and subsidies, and GM knows it. Though details are sparse and largely sifted out of the murk of PR leaks, teases and hearsay, a picture of post-IPO GM's 2012 lineup is beginning to form. The success of these vehicles depends on a number of difficult-to-predict factors, but assuming fairly conservative projections (steady increases in US economic growth, auto sales and gas prices), it's not too hard to tease out a few early conclusions on GM's strategy. So let's hop in the time machine and set the dial for the Fall of 2011.

Editorial: General Motors Zombie Watch 13: Manic Street Preachers

Robert Farago — Wed, 12 Aug 2009 02:46:12 +0000

While General Motors has downsized physically and financially, the nationalized American automaker still suffers from a monumental mental disorder. Today's F5 PR tornado made that point pellucid. In fact, it's hard to know where to begin the diagnosis. We might as well start with the "big news" on the vehicle destined to become GM's Edsel. The General would have you believe that the Chevrolet Volt will achieve 230 miles per gallon in city driving. Yes, well, the Volt is supposed to surmount the first forty-miles on battery power alone. So I make that . . . zero miles per gallon; you know; as it's not using any liquid fuel. Hey! Anyone remember [former] Car Czar Bob Lutz's hand-wringing re: the Volt's gas supply fouling because owners would never use the internal combustion engine? Like that. Quick question: what drugs are these guys on? More accurately, why aren't they taking their meds?

General Motors Zombie Watch 12: Fear of Music

Robert Farago — Fri, 24 Jul 2009 18:48:11 +0000

When columnist Daniel Howes at the Detroit News gets pissed off enough at GM to write anything other than "we shall see what we shall see," you know the former bankrupt is doing something very, very wrong. The object of Danny's ire: the lack of fresh faces at The New GM. "To read the announcement of GM's new nine-person executive committee, the promotions and the retirements, as I did minutes after it was made public, is to hear the faint strains of Talking Heads singing 'same as it ever was, same as it ever was' and to hear more wailing about the chronically clueless GM." Mind you, Howes isn't calling GM chronically clueless (that's our job). He's angry that "the feds' pay-and-bonus restrictions essentially make it impossible for CEO Fritz Henderson to woo outside talent for inside jobs." Woo-hoo! Howes is on the money; out in the real world, $500K doesn't buy you a reasonable Human Resources manager. But hey, did someone forget the GM stands for Government Motors?

General Motors Zombie Watch 11: Cadillac Must Die

Robert Farago — Fri, 10 Jul 2009 13:50:19 +0000

General Motors has left bankruptcy behind. The MSM is greeting GM's graduation with guarded not to say advertiser-sponsored optimism. Meanwhile, the populist backlash has begun. Yesterday, for the first time, I heard a "civilian" refer to GM as "Government Motors." And then, another. Even if you discount the protest as right wing rhetoric (I was listening to Fox Talk), it's clear that General Motors is becoming a lightning rod for anti-government sentiment. With tax hikes looming and the federal deficit ballooning, the public is starting to see the "new" General Motors as a symbol of federal impudence, intransigence and impotence. In fact, GM could be President Obama's Iraq: the Gordian knot that strangles his political fortunes. To fully understand the futility of this financial folly, consider Cadillac.

General Motors Zombie Watch 10: Fritz Henderson Must, Uh, Go

Robert Farago — Tue, 07 Jul 2009 02:34:56 +0000

So how long before New GM fires Uncle Fritz? In the most pragmatic of all possible worlds, where the Presidential Task Force on Automobiles (PTFOA) looked out for the taxpayers' $50 billion as if it were their own---Fritz wouldn't even BE GM's CEO. Henderson would have been defenestrated along with Rick Wagoner. You know: the ex-CEO who groomed Henderson as his replacement. (How hard is it to connect those dots?) Henderson has assured his place in The Peter Principle Hall of Fame, capping his career as the PTFOA's toady. And now, best case, he should follow Old GM onto the scrap heap of history. Not a chance.

Editorial: GM Zombie Watch 9: GM Announces “Buy and Say Goodbye” Sale

Robert Farago — Wed, 01 Jul 2009 14:17:13 +0000

General Motors is launching a fourth of July sale: "Buy and Say Goodbye." From July 1 to July 6, the bankrupt automaker's offering 0% financing for up to 72 months on "most" of its dead brand walking Pontiac models and "some other vehicles." More specifically, "select 2009 and 2010 vehicles in dealer stock including Chevrolet Silverado and GMC Sierra regular, extended and crew cab light-duty pickups; Chevrolet Suburban and GMC Yukon XL SUVs; Chevrolet Impala; and the Pontiac models: Vibe, G3, G5, G6 and G8." But wait! There's more! "Many other vehicles will have reduced rate financing of 0 percent for up to 60 months for well-qualified buyers. A full list of current offers, conditions, and eligible vehicles, is available at: http://www.gm.com/shop/currentoffers/." Not yet it isn't. So that's number six on our list of reasons why this sale is dumber than toast. Counting down . . .

Editorial: General Motors Zombie Watch 8: “7 Reasons Why The New GM Might File for Bankruptcy”

Robert Farago — Thu, 25 Jun 2009 22:12:29 +0000

Communist witch hunters called Americans who supported the battle against Francisco Franco before World War II "premature anti-fascists." In other words, they were right for the wrong reasons. There's a lot of that going around these days. For example, Chrysler and GM's claim that they need to cull dealers is spot on. But trimming overheads, as the automakers claim, ain't it. [see: number three after the jump]. By the same token, it's also true that New GM is doomed to failure. But not for the seven reasons that Seeking Alpha sets forth. Still, Jason Mathew's analysis is worth a closer look . . .

General Motors Zombie Watch 7: One Way Out

Robert Farago — Wed, 24 Jun 2009 01:43:20 +0000

I can't decide whether GM's "reinvention" will fail through government action or inaction. On one hand, I share the commonly held belief that GM's product portfolio will be skewed towards small cars, to satisfy the Obama administration's love of all things green and beautiful. Even without express orders to do so, GM's craven executives will seek to please their elected overlords' politically-driven desires. On the other hand, paralysis. The last thing GM's cumbersome, dysfunctional management needs is another layer of command and control---especially one where accountability is measured in votes and patronage, rather than dollars and cents. The tendency to do nothing slowly, as is the way of all government, is great. If I had to guess which way this is going to go, I'd say both.

General Motors Zombie Watch 6: CEO Henderson: “I Hate Myself”

Robert Farago — Fri, 19 Jun 2009 13:02:48 +0000

That's not exactly what GM CEO Fritz Henderson said to BusinessWeek, as part of the bankrupt automaker's charm offensive. The exact quote was "I know I have to re-prove myself." So, just as there's a "bad" GM (the one that latched onto the federal teat) and a "good" GM (the other one that latched onto the federal teat), there's now a "bad" Fritz Henderson (the one who weaseled his way to the top of GM's dysfunctional corporate culture) and a "good" Fritz Henderson (the one who wants to reform the stultified system that spawned him). As we say in these parts, good luck with that. Those of our Best and Brightest who've seen large companies try to reform their not-so-wikkid ways will recognize the resulting lip service . . .

Editorial: General Motors Zombie Watch 5: Cross-Eyed and Painless

Robert Farago — Sun, 14 Jun 2009 01:25:03 +0000

I had an interesting conversation with PCH101 about New GM's governance. Like many observers, the TTAC commentator is not ready to dismiss The Presidential Task Force on Automobiles (PTFOA) out of hand. I, of course, am. Have done. Will do. But before I do (again), consider PCH101's logic. He credits the PTFOA for clearing out the deadwood: finally ridding the failed automaker of the troublesome man who guided the company on its final descent into bankruptcy. He also believes that the 25-member PTFOA is a better bet for GM than the original plan for federal oversight: a car czar. "I remember a study in B-School that concluded a committee of managers without any direct experience in an industry made more effective decisions than a single autocratic insider." With all due respect, crap. And completely irrelevant.

Editorial: General Motors Zombie Watch 4: A House Divided

Robert Farago — Fri, 12 Jun 2009 15:28:12 +0000

Matthew 6:24: "No man can serve two masters; for either he will hate the one and love the other, or he will be devoted to one and despise the other." Applying this biblical admonition to General Motors, it's clear that the federal bailout will accelerate rather than retard its ultimate demise. The automaker's corporate culture was dysfunctional before the feds took the reigns back when its over-compensated suits made sure that failure was impossible (and not in a good way). Now that GM employees must answer (at least in the theoretical sense) to both management and politicians, it's twice as screwed-up. As I indicated in this morning's Wall Street Journal Op-Ed, the political interference with the company's operations is already underway. Well of course it is. And it will continue. As will GM's descent into oblivion. Simply put, there's no way GM can get its house in order when Uncle Sam is the landlord. SNAFU × 2.

Editorial: General Motors Zombie Watch 3: Dealer or No Dealer?

Robert Farago — Mon, 08 Jun 2009 16:50:57 +0000

General Motors is at war with itself. Thanks to a staggering though not unexpected lack of decisiveness, GM's management has managed to completely alienate its major, public-facing "stakeholder:" GM dealers. Without the guys on the sharp end moving the metal, General Motors might as well declare bankruptcy and surrender the keys to the executive washroom to a 25-member federal quango led by Washington insiders with no manufacturing experience whatsoever. Oh wait. In fact, GM needs its dealers even more now that it's a zombie than before, when it was also a zombie (but didn't know it). And of all the items of GM CEO Fritz Henderson "to do" list, not throwing GM's entire U.S. dealer network into chaos should have been somewhere near the top. I want to say something about a "race to the bottom," but I'll let you connect those dots.

Editorial: General Motors Zombie Watch 2: Still On the Fritz

Robert Farago — Thu, 04 Jun 2009 14:27:53 +0000

Sorry to bang on about Fritz Henderson. But, well, there he is. Again. Still. With every passing post-C11 day, the GM CEO is sealing his position as the "Uncle Walt" of the federal automotive bailout. With every news conference, media suck-up and, now, congressional inquiry, it's increasingly clear that Government Motors' masters aren't going to give GM's mustachioed public face the old heave-ho anytime soon. Or, more accurately, soon enough. Let's face it: the Presidential Task Force on Autos should have sent Fritz his walking papers on the same day they defenestrated his mentor: GM's last CEO. In and of itself, this failure to excommunicate is enough to abandon all hope of the zombie carmaker's resurrection (which is an inherently ridiculous idea anyway). Drilling down deeper, we hit nothing but sewage.

Fritz Henderson's Statement @ Yahoo! Video

Editorial: General Motors Zombie Watch 1: The World According to Fritz

Robert Farago — Wed, 03 Jun 2009 14:15:54 +0000

GM CEO Fritz Henderson has filed a deposition with the federal bankruptcy court [download here] pleading for a 363 motion that would create the "new" zombie GM from the corpse of old debt-ridden GM. "In the face of the global meltdown of the financial markets, and a liquidity crisis unprecedented in GM’s 100 year history, there is only one way to maximize the value and permit the survival of GM’s business and save hundreds of thousands of jobs associated with not only GM, but also its vast supplier and dealer networks: these chapter 11 cases and the prompt approval of the 363 Transaction." While I don't expect Fritz to say "GM has entered this crisis due to epic mismanagement of which I am a fundamental part," it strikes me as odd that this blame avoidance arrives on page three. Isn't it a bit early to say "it's not our fault?" Apparently, early and often is the strategy here.