General Motors Death Watch 161: The Emperor's New Clothes

general motors death watch 161 the emperors new clothes

In the old fairy story, con men convince a naked sovereign that he’s wearing fine clothes. Applying that cautionary tale to General Motors is not as straightforward as it seems. Is GM CEO Rick Wagoner aware that the enormous automaker is tumbling towards bankruptcy? Or is he living in a dream world, demanding that his "kingdom" admire his invisible finery? Whether Wagoner’s deluded or deluding, his ”GM Statement on Turnaround Plan” indicates that GM is still buck naked.

"We're delivering on the turnaround plan we established in 2005, and have exceeded expectations on virtually all counts," Wagoner proclaimed.

Welcome to Wagoner’s world, where you can announce that you’ve exceeded your expectations without revealing them. In truth, Wagoner has never set hard targets for GM’s recovery. Not sales. Not market share. Not even a return to profitability. If GM doesn't say where they’re going, why should we believe they’re getting there?

Even a brief look at GM’s declining sales, lost market share and red ink-stained balance sheet reveals that Wagoner’s a legend in his own mind. GM’s decline is a trend that started before the unspecified 2005 “turnaround plan,” that’s continued unabated since its implementation. But never mind that, because “We've set a strong foundation that we can truly build on. We're encouraged by our progress in revitalizing our product portfolio, strengthening our brands, reducing structural cost and growing the business globally.”

Hang on; a few well-received products do not a turnaround make. For one thing, the Chevrolet Malibu, new Cadillac CTS and Lambda-based Crossovers may be media darlings, but none qualify as a runaway sales success. That's especially true as The General screwed-up the supply chain for all three cars, leaving dealers SOL. Lest we forget, GMNA is still juggling eight brands and 49 products (not including discontinued models still for sale or variants). Even if you spot GM five hit products, well, you do the math.

And while we’re at it, GM’s product portfolio is still truck-heavy in an increasingly truck-aversive domestic market. Using the EPA definition of a truck, 28 of those 49 products qualify. That’s 57 percent. Trumpeting the fact that [some of] the vehicles within GM’s product portfolio are “revitalized” is equivalent to boasting that you made a perfect three-point landing at the wrong airport. And that’s without questioning GM's trucks' diminishing profitability.

But we’re really off in “admire that naked man’s clothes” territory when considering Wagoner’s assertion that his administration has strengthened GM’s brands.

Chevrolet is gas-friendly to gas free (if you consider a diesel pick-up “gas free”), but it still sells everything from a rebadged Korean econobox to a $60k sports car without any unifying concept. Saturn asks potential buyers to “Rethink” without giving them anything coherent to think about. Cadillac, the supposed standard of the world, lacks a credible flagship– and looks set to fall further down market. What is a Saab? Does anyone care? Near-luxury Buick is near death (unless you’re in China). Buick's most aggressive competitor, GMC, is re-positioning itself as an upmarket Chevy. Which is what again?

Pontiac is in a Holden pattern, repositioning itself as an importer of rebadged Australian rear wheel-drive sedans. Meanwhile, it sells a farrago of rebadged Chevies (which is what again?), a couple of Toyota and Saturn homonyms and… the Grand Prix. Of all GM’s eight brands, weak-selling Hummer is the strongest; albeit one that’s a politically or gas conscious buyer's anti-matter.

If "strengthening brands" means eight automotive “companies” offering a range of mostly lackluster products that overlap each other in niche, price, engineering and style; products that don’t as a whole adhere to a clear branding strategy, mission accomplished.

So all we’re left with is “reducing structural cost.” As GM’s NA market share is shrinking, and cost-cutting is GM’s Beancounter in Chief’s forte, you’d expect progress on that front. But it should be remembered that all this cost reduction adds to GM’s mountain of debt. The bill for all those employee buyouts and plant closures will eventually come due, and GM’s forthcoming $29.9b VEBA contribution ain’t chicken feed neither.

As for “growing the business globally,” GM North America was, is and will be a financial sinkhole. It will continue to swallow-up all the profits GM can generate abroad– until GM’s Board of Bystanders will be forced to cut North America loose (i.e. declare Chapter 11) to save its European operations.

If you’re happy to admire the Emperor’s new clothes, the “GM Statement on Turnaround Plan” will inspire reverence. But let me draw your attention to one small statement therein. Wagoner promises to “build GM's advanced propulsion leadership position.” For Wagoner to even IMPLY that GM is the leader in advanced propulsion, or SUGGEST that they’re going to build that leadership from scratch, moves beyond hubris into an entirely new realm of fantasy. News flash: the Emperor is naked.

[Read the “GM Statement on Turnaround Plan” here.]

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  • Matt Posky A lot of dune buggies aren't street legal and plenty that are aren't really fit for any kind of sustained highway driving.Unless you live in a state where it's pretty much wide open for vehicle mods and the cops don't care how wild your ride looks, you're probably towing it to its play space. While the Manx should be street legal and capable of making it to the dunes without outside help -- arguably part of its appeal vs other options -- it's hard to assume a majority of owners won't still opt to drag it behind their pickup or SUV.
  • Pmirp1 That is one more color than they have added to Grand Cherokee or Grand Cherokee L in three years. White, Grey, Silver, Black and a dark boring red. No Blues. No Forest Greens. No Beige. It is as though Jeep forgets they own the green SUV market and yet they refuse to give us any rich colors.
  • Golden2husky Customers should simply not buy this with such stupid markups. But since this is a "limited edition" model there will be those stupid enough to pay it. I walked away from a Supra for my wife because the dealer wanted a $20K markup on a $54K car...this Before the pandemic. Screw that. I worked way too hard for my money to throw it away. If I'm going to give my money away there are plenty of causes I support and dealers ain't one of them...
  • Arthur Dailey In the current market many are willing to pay 'extra' to get a vehicle that may be 'in stock'/on the lot. An acquaintance recently had his nearly new vehicle stolen. His choices were rather limited a) Put a deposit down on a new vehicle and wait 4 to 6 months for it to be delivered. And his insurance company was only willing to pay for a rental for 1 month and at far less than current rental costs. b) Purchase a used vehicle, which currently are selling for inflated prices, meaning that for the same vehicle as the stolen one he would need to pay slightly more than what he paid for his 'new' one. c) Take whatever was available in-stock. And pay MSRP, plus freight, etc and whatever dealer add-ons were required/demanded.
  • SCE to AUX I like it, but I don't know how people actually use dune buggies. Do you tow them to the dunes, then drive around? Or do you live close enough that the law winks as you scoot 10 miles on public roads to the beach?As for fast charging - I doubt that's necessary. I can't imagine bouncing around for hours on end, and then wanting a refill to keep doing that for a few more hours in the same day. Do people really run these all day?A Level 2 charger could probably refill the 40 kWh version in 6 hours if it was 80% empty.
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