General Motors Death Watch 111: Munit Haec Et Altera Vincit

Robert Farago
by Robert Farago
general motors death watch 111 munit haec et altera vincit

Since the General Motors Death Watch began, GM employees, dealers and customers have emailed me their perspective on the General’s general degradation. Obviously, financial analysts are important (and confidential) contributors to this mix. While their info provides invaluable insight on the automaker’s slide into bankruptcy, their language can be daunting. So when I read this simple declarative statement in a recent investor briefing, I was shocked. “GM and Ford retail sales should continue their precipitous decline."

The numbers are bad. The Wall Street firm reckons GM’s February sales are set to drop 11%. That would leave the world’s largest automaker with a relatively paltry 23% share of the domestic market. Small, and unsustainable. According to The Detroit News, GM is currently losing $1300 on every vehicle it sells in the North American market. Toyota is making $2100.

The numbers suck, but the word is worse. “Precipitous;" as in “over a precipice.” As in free fall. Indeed, despite an endless stream of new product hype, the question is finally beginning to be asked: when and where will GM’s domestic misery end?

Although Rick Wagoner is the head of one of the world’s largest publicly held companies, GM's CEO has been stonewalling on this question since June 2005, when he announced the first round of production cutbacks and employee pay-offs buy outs. Unlike Carlos Ghosn, who set hard targets for Nissan’s turnaround, Wagoner has refused to commit to a defined– and thus measurable– corrective course. In other words, he’s completely unaccountable.

The American people aren't bothered. In fact, they're clueless. While amateur and professional pundits busy themselves debating GM’s fate, the average GM buyer doesn’t know/care about their transportation provider’s financial woes. They remain oblivious to the seismic rumbles foreshadowing the yawning chasm that’s about to open up and swallow GM’s business. At least that’s how things stood until last week.

Last week, the automotive press went slightly crazy. The possibility that GM would buy Chrysler unleashed a torrent of speculation about The Big 1.5. Aside from the frightening fact that Rabid Rick’s ego could be stroked with sufficient skill to get him to even contemplate such a preposterous move, and the millions in consultants’ and bankers’ fees paid to the strokers, the “GM wants Chrysler” media feeding frenzy was nothing more than a feeble distraction from a looming catastrophe.

The real action was going down at Daytona. During the Daytona 500 pre-race show, Toyota’s entry into NASCAR was a hot topic. Commentator Darrell Waltrip, who runs a Toyota truck in the Craftsman series, whose brother Michael operates a team that races Camrys in the Bush and Nextel series, was ready with a reply.

"Don't forget: the Camry is the only car of the four [Camry, Fusion, Monte Carlo and Charger] that's built in America. The Monte Carlo and Dodge are built in Canada and the Ford is built in Mexico. There are seven thousand people in Georgetown, Kentucky who build over three hundred thousand Camrys a year."

It was a defining moment in GM’s history. At a single stroke, the carmaker’s ability to wrap itself in the American flag was dealt a telling blow– in front of the very people to whom it matters most. By a man they respect and admire. This is our truck, this is our country. Uh-huh. Now tell me again what the Hell you boys are doing building Montes in Canada? Never underestimate the damage a company suffers when it breaks faith with its customers’ deeply held beliefs.

GM’s very own perception gap– the difference between the idea that they’re the home team and the company’s willingness to outsource automotive production abroad– is headed for extinction. It’s only a matter of time before GM is just another car company, just another once proud old line American business that couldn’t compete with faster, sharper and more intelligent competition.

The loss of patriotic identification is simply the continuation of a longstanding trend: GM’s diminishing stature. Fire Sale for All. Toe Tag Sale. Anyone with a pulse financing. Cash back. Imported Monte Carlos. At some point soon, the “average” GM customer’s understanding of GM’s place within the automotive firmament will evolve, from mighty power to beleaguered underdog to loser.

No wonder GM chose to pretend (perhaps even to itself) that’s it’s in a position to “buy” Chrysler (straight stock swap more like). Lest we forget, General Motors was formed by swallowing up smaller car companies. But this, well, this is a sad echo of a once great dynastic power’s ability to mow down all before it. The “Chrysler deal” is one last chance for GM’s power players to pretend that they’re calling the shots in the U.S. automotive market, rather than fighting a losing rearguard action against the barbarians inside the gates.

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  • on Mar 02, 2007

    [...] Thanks to the actions of 50 state legislatures, no dealer can die. The General has too many dealers yet it cannot euthanize them. GM has spent the past two decades closing factories, laying off line workers, and buying out knowledge workers. Yet, its dealer network remains the same size when its share of the American market stood at 35%. Unfortunately for GM, its market share is sliding to less than 25% by the end of this decade. [...]

  • on Mar 03, 2007

    According to Mr Farago, GM is "fighting a losing rearguard action against the barbarians inside the gates". Actually, the barbarians are headquartered outside the gates, protected at home by $420 BILLION in low interest loans over the last five years from the Japanese government aimed at keeping the value of the Yen down. "Faster, sharper and more intelligent"? How about opportunistic, xenophobic and miserly, for words that more accurately describe Toyota. Perhaps you have never tried to solicit engineering contracts from their US offices. You should. Then tell me how you feel when they respond "we don't do that sort of work, we rely on our first tier suppliers for that..." Sure .... a top-flight company all the way through.

  • Legacygt Great review. I've only driven one Wilderness model (an Outback provided as a dealer loaner) and I found the handling a little sloppy on-pavement. It's good to hear they managed to give the Crosstrek the Wilderness treatment without hurting the on-pavement experience.And this is the first time I've read a review that dared to criticize Star Tex seats. I find the material interesting and low maintenance and fairly comfortable but I totally agree that it rates very poorly for breathability. It's so bad that I think Subaru should offer it with some sort of ventilated option. 5 minutes on a hot day and you're sitting in a pool of sweat.
  • Analoggrotto Too bad they don't sell Kia Telluride, the greatest selling vehicle in it's class over the pond in the UK who burned Washington DC down but that's ok.
  • Analoggrotto Kia Telluride never faced such problems and now offers a superior offroad trim for those times where soccerdad needs to go get the white claws from costco.
  • Zerofoo There's a joke here somewhere about Tim's used car recommendations, Tassos, and death traps.
  • Tassos Subaru really knows how to take fugly to ever higher levels, and sell every one of the (of course very few) it makes. As if the number of sales negates the fugliness.Don't hold your breath. I bet this will NOT be the vehicle James Bond arrives at the Casino in Monte Carlo with in his next flick. (if any)