General Motors Death Watch 89: Elimination

Robert Farago
by Robert Farago
general motors death watch 89 elimination

So, General Motors has pulled its sponsorship from Survivor. Flackmeister Ryndee S. Carney claimed GM came to its decision “months ago, before the show made its recent announcement." The announcement in question: Survivor will divide its competitors by race and ethnicity. Carney quashed the idea that GM pulled the plug in response to the controversial formatting in no certain terms: “I think it's just a coincidence.” Think? Carney’s comment brings into question GM’s ability to tell the truth and, thus, to survive its evaporating market share, bloated dealer network, distended brand portfolio, lackluster product lines and horrendous cost structure.

Not to belabor the point (much), GM claims they pulled their $14.7m plug on Survivor three months ago. Yet on May 12th, GM and CBS publicly revealed The General's intention to increase their Survivor ad spend. In any case, Carney played dumb, insisting that GM was simply shifting support to TV shows offering product placement. "There's a limited number of possibilities as to how you can integrate a car or truck in a show [when] people spend their whole time on an island." Despite (or because of) the fact that a Pontiac Aztek played a role in a Survivor episode, Carney’s stab at PR humor set exactly the wrong tone. Instead of addressing a serious issue head on, GM smiled and sang “It wazzunt me.”

Not to belabor the point (again), is it too much to ask GM to tell the truth? OK, Survivor sponsorship isn’t a big deal– even if would be nice to see one of America’s largest companies declare its distaste for a TV program that engenders racial or ethnic divisiveness. What about the fact that GM is cutting production in the fourth quarter by 12 percent, or 150k vehicles? Now that’s serious; the move will torpedo fourth quarter revenues. The company’s press release states that the cut "does not reflect a reduction in GM's sales outlook but is consistent with our strategy to reduce low-margin daily rentals, and takes into account the plan to shift production of pickups to the next-generation pickups during the fourth quarter." No shit?

I guess I’m the only one who remembers that GM originally planned to cut production by eight percent, and consider the fact that the axe is falling on GM’s new[ish] gas-guzzling SUV’s somehow related to the increased decrease. To wit: during a recent conference call with reporters and auto industry analysts, GM’s Supreme Spinmeister Paul Ballew declared that GM’s production cutbacks were not a response to “a sudden deterioration in conditions.” "It's new news to you," Ballew said, "but it's not new to us." In other words, we know what we’re doing and we sure as Hell don’t have to tell you about it.

The first proposition is highly suspect, the second highly inadvisable. As I’ve said here before, GM CEO Rabid Rick Wagoner’s failure to articulate a specific, honest, clear and coherent turnaround plan that includes all of GM’s “stakeholders” will be his undoing. Yes, Rabid Rick says he has one, and frequently tells the world that The General’s adherence to this unexpressed timeline proceeds apace. Is it inconceivable that Wagoner’s reluctance to publicly declare his comprehensive recovery strategy reflect his unwillingness to be held to its dictates?

Yes, it’s inconceivable. If I held GM stock, or worked for the company, or ran a GM store, I would be furious at The General’s lack of transparency and accountability. “Keep the faith” is all well and good when you’re minting money, but that and $1.45 won’t get you downtown when the buses are no longer running (so to speak). Clearly, GM adheres to America’s new de facto standard for corporate citizenship: spin, gloss, weasel and waffle.

Take GM’s latest sales results. What are we to make of August’s 3.8 percent retail sales jump? First, it’s a year-on-year result, compared to last August’s cataclysmic post “Employee Discount for Everyone” hangover, when GM’s sales fell off a cliff. Second, sales of GM’s low-profit plain Jane sedans account for much of the rise. And third, we hear tell that GM’s “Anyone with a Pulse” financing continues, a development that will eventually hoist GM by its own petard. According to GM Marketing Maven Mark LaNeve, “Customers clearly are responding to the quality, value, versatility and fuel efficiency of our cars and trucks.”

Maybe so. But GM’s failure to change its business model, the implementation of forthcoming production cuts, the resulting affect on its cash position and the ongoing threat of a strike at bankrupt parts supplier Delphi overshadow any August cheer. And now that Billy Ford has admitted The Blue Oval’s dire straits, it’s clear that GM’s execs continue to live on an island of their own making, facing stronger, smarter and better fed opposition. News flash: GM’s tribe will not survive.

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  • Dhathewa Dhathewa on Sep 06, 2006

    "I get two versions of the G.M.story.The first version [from GM] tells me sales are up..." Sales are up, slightly. If you adjust for selling days, though, I believe they're flat to last August. The loading dock may be very busy but one of GM's problems is that you don't save too awfully much money if you shut down, which is one way Detroit used to cut costs when things were slow. GM is continuing to build product and letting prices slide to keep "market share." Smart moves? Wagoner thinks so. But Wagoner wouldn't be the first CEO to put a company that was already floundering right onto the rocks. The big new product, the Sky/Solstice have combined sales of about 2500 units/month. That's not going to drive the turnaround. Wagoner just committed to 5/100 on the powertrains, which should help move cars but will also drive warranty costs up. IF the cars are good enough, this won't cost GM a lot of money. IF Wagoner's wrong about the reliability of the cars, GM's costs are going to go up as a result of this. I'd point out, though, that Toyota (and Honda and others) already has 5/60. For anyone who only drives 12K miles or fewer per year, 5/100 is not an advantage. The advantage here is only for people who put a lot of miles on their cars. My personal take on this is that if 5/100 powertrain warranties were justified by the reliablity of the cars, Wagoner wouldn't have waited for Ford to go to 5/60 first.

  • Jerry weber Jerry weber on Sep 09, 2006

    I believe things are so desperate at places like GM that no one cares what the warranties will cost in five years, they need oxygen now. It was the same story with 0% financing an no credit good rating needed.GM and ford have got to make sales now, clear their inventory and hope the new stuff sells easier. AS I previously said, how big can they ever be again with half the plants and people to staff them? Dhathawa has it pretty good, if you think the sky and solstice will save gm think of their production as equal to corvette, with a ticket price half as much. These are halo products not large sale cars like camry, accord, civic etc. When they can invade those turfs, then success may be near, but who is to build this stuff?

  • Art_Vandelay “Fain also invited President Joe Biden to join the striking workers on the picket line”Yes. Please go on strike Joe. One of this Cosmo Kramer Bagel making strikes that lasts for a decade or so
  • SCE to AUX No sitting President should visit a picket line.
  • Scott So a sled manufacturer makes a sled on wheels. Where is the surprise?
  • Add Lightness I had one of these for a company truck. It was also 2WD thankfully as part-by-part the truck got everything replaced over the course of a year. If it was 4WD, that would have just hurt the company more fixing the extra drivetrain.
  • KOKing I like 2dr SUVs (I'm glad the new Bronco is available w 2 doors; it's MUCH better looking, and I'm finally seeing more of them on the road), but I've seen the Mexico-only 90s Ramcharger a couple of times and it has that same too-big rear window look that these old ones had.