General Motors Death Watch 179: Black Tuesday
In July's Car and Driver, Csabe Csere takes the Secretary of Transportation to task for her ignorance about auto industry lead times. How can Mary E. Peters' department mandate a big increase in fuel economy standards for 2011 when Detroit’s already signed off on those products? Despite the obvious irony– the buff book’s hobbled by their two-month lead time– Csere makes a good point. The corollary: unless GM planned to switch from gas-guzzling light trucks to fuel-efficient cars in 2003, they’re insert F-bomb here. As May’s sales numbers indicate, indeed they are.
Last month, GM's light truck sales sank 22.1 percent. The GMT900 pickup trucks and SUVs touted as the Next Big Thing are No Big Thing. Chevrolet Tahoe sales are down 39.7 percent; the brand's pickups are off 42 percent. The next Next Big Thing after that, GM's Lambda-platformed crossovers, are also a damp squib. Sales of the GMC Acadia are down 27.6 percent. Saturn dealers sold 38.1 percent fewer of its twin under the skin, the Outlook. Add in ALL GM trucks, and May wiped 36.7 off the comparative sales ledger.
Like Richard Nixon before him, GM CEO Rick Wagoner takes all of the responsibility but none of the blame. At this morning’s shareholder meeting, GM’s 14.4 million dollar man had an opportunity to, as CNN mistakenly predicted, “step up.” Instead of [finally] outlining a specific plan for a return to profitability, Wagoner announced that GM is shuttering four truck plants and ramping-up car production. Why in three year’s time, cars will account for 60 percent of GM's North American production (up from about 50 percent)!
Wagoner’s “plan” to shut off GM’s light truck production spigot in the next three years is too little too late. At the end of April– BEFORE the May sales stats– GM had a 125-day supply of pickup trucks and most SUVs (e.g. Chevy Suburban and Tahoe). The truck glut will continue, and continue to drive down prices. GM’s life-sustaining profits will shrink further and their cash pile will burn even faster. Not to mention the fact that the plant closures could bankrupt struggling suppliers and cripple GM’s already fragile supply chain.
Meanwhile, Wagoner’s put the HUMMER brand on the auction block. Sure, Hummers sales are in the toilet; down by 60.2 percent this month. But from a wider perspective, the CEO’s increasingly familiar refrain of "all options are on the table” is proof (if proof were needed) that GM’s branding strategy is in tatters. Less than two months ago, the automaker created the HUMMER, Cadillac, Saab” division. Why the quick change of heart? Lest we forget, Hummer is GM’s strongest brand, boasting the company’s highest customer retention stats. At least it DID until Wagoner very publicly clouded HUMMER's future….
Don’t get me wrong. The General Motors Death Watch series started with the premise that GM should be broken-up and sold, with HUMMER as the idea’s poster child. But if radical, fundamental restructuring were the goal, as it bloody well should be, Wagoner should have swung an axe on an entire division, not just Hummer. Saturn was a more logical choice. It's a dead brand walking whose recently refreshed product line did sweet FA for sales (down XXXX). But with or without Hummer, it’s steady as she goes brandwise over at RenCen. Still.
Which means it’s only a matter of time before GM’s lobbyists head over to the White House and Capitol Hill with their billion-dollar begging bowl. Can GM hold out until after the presidential election? Perhaps. But the most amazing part of all this is that Rick Wagoner will probably be at the helm when GM’s slow-motion self-petard hoisting reaches its inevitable dénouement.
Truth be told, Wagoner’s “success” at GM has been the automaker’s greatest failure– at least in the last decade. Yes, it's Wagoner's tenth year at the helm (eighth years as CEO) of what was, before his tenure, the world’s largest automaker. Wagoner’s watched GM’s North American market share slide some ten percentage points. He’s seen the company shed tens of billions of dollars of stockholder value– and lose tens of billions of dollars. He’s sold everything that wasn't nailed down and pissed away the future of millions of American workers; all while lining his pockets and securing a bankruptcy-proof pension.
When the history of GM is written, Rick Wagoner will be easily identified as the architect of the automaker’s final, sad chapter. Wagoner will be condemned for his lack of vision, leadership and, above all else, timing.
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