General Motors Death Watch 209: Reality is the New Perception

Robert Farago
by Robert Farago
general motors death watch 209 reality is the new perception

The average American has no idea that GM is run by a bunch of nimrods. And even if they knew about the Machiavellian machinations behind the automakers’ recent struggle for survival– including hiring a raft of ex-treasury officials to lobby their former employer for tens of billions of GM bailout bucks– they wouldn’t care. That’s all Inside Baseball stuff. Joe the Public has enough on their proverbial plate just running the kids to school, keeping food on the table and putting a roof overhead. But when it comes to buying a new car, well, that’s a horsepower of a different color.

As they should, American car buyers have acted– and will continue to act– in their own automotive self-interest. You can debate about the “perception gap” between GM and its rivals’ products until you’re blue in the state, but the bottom line remains: consumers prefer transplants’ products. It is this sharp end decision that has effectively (if not legally) bankrupted GM. And there’s no indication whatsoever that General Motors has the weaponry needed to reverse this trend.

In fact, there’s little reason to suspect that GM will EVER have the products needed to sustain the 20 percent plus market share it needs to justify its existence. I repeat: no matter how many tens of billions GM– or GM-Chrysler– sucks from the federal taxpayer, it has no chance of staunching the wounds that are draining its lifeblood. Too big too fail or not, taking money from American taxpayers who have exercised their freedom to buy what they want to sustain a company who cannot produce what they want to buy is a special kind of madness; on a scale that dwarfs even the UK’s British Leyland debacle.

Morality, ethics, principles and pragmatism aside, there’s history here as well. GM’s decision to marry its fate with Chrysler to stay afloat is pregnant with irony and foreboding. If Chrysler hadn’t suckled on the federal tit back in ’79, and then paid back its loan guarantees, GM’s current plea for federal assistance may have lacked sufficient credibility to succeed. Thanks to Snoop Dog’s golfing buddy, GM can point to Chrysler as a successful model of government intervention in the U.S. automobile industry.

It’s a simple idea that resonates well even (especially?) with an uniformed public: you did it before; you can do it again! Hell, you guys even made a profit from the Chrysler bailout– uh, guarantees! Yes, well, one small problem: Chrysler’s about to go away. Assuming GM merges with Chrysler– hoovering any remaining ChryCo cash and releasing 2 Big 2 Fail’s song “Obama’s Yo Mama”– the argument that Chrysler is a template for recovery kinda sorta disappears. In other words, the deal transforms the success of the last bailout– uh, loan guarantees– into an abject failure.

Sure, GM won’t touch Chrysler initially– for that very reason. But the media ain’t dopes. They’ve already picked-up the scent of the story that gives them an instant, persistent info-stiffie: job losses. As TTAC commentator thalter points out, “spending government money to facilitate layoffs is not going to sit well with the American people.” That’s doubly true if and when GM’s monumental management compensation and Cerberus’ deep pockets come to light.

GM is counting on speed and stealth to get their bailout bucks before the truth hits the public consciousness (a.k.a. public hearings). CEO Rick Wagoner and his minions know they’re already behind the eight ball from a PR perspective; the average American reckons all this trouble is Detroit’s own fault, for building gas-sucking SUVs rather than… something else. As sure as eggs is eggs, bailout fatigue, a genuine conservative backlash and the post-election diminution of Michigan’s political power are all coming down the pike.

And just like the $700b bailout bill, the chances are good that GM will sneak under the wire and get their money. But here’s the thing: it will be a Pyrrhic victory. The attendant publicity may paint GM as a victim, but it will also paint a big ass L (for loser) on every single one of its 1,274 products. Even as GM makes its case to reporters (under the guise of anonymous sources), wooing the politicos and Powers That be, they’re stigmatizing their products to the only people who really matter: car buyers.

Zoom back into the micro-level, and this soon-to-be highly publicized bailout will hand American consumers yet another reason not to buy a GM product. Protect American jobs? Of course. But… If, indeed, no one wants to buy a vehicle from a bankrupt automaker, it’s also true that not everyone wants to buy a car from a “troubled” one. Not to put too fine a point on it, when it comes to family finances, there’s no such thing as a sympathy fuck.

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  • El scotto Never mind that that F-1 is a bigger circus than EBFlex and Tassos shopping together for their new BDSM outfits and personal lubricants. Also, the F1 rumor mill churns more than EBFlex's mind choosing a new Sharpie to make his next "Free Candy" sign for his white Ram work van. GM will spend a year or two learning how things work in F1. By the third or fourth year GM will have a competitive "F-1 LS" engine. After they win a race or two Ferrari will protest to highest F-1 authorities. Something not mentioned: Will GM get tens of millions of dollars from F-1? Ferrari gets 30 million a year as a participation trophy.
  • El scotto None of them. The auto industry is full of people with huge egos. It's a case of huge ego = never ever being wrong.GM: The true believers end up at Bowling Green. A fast rising GM executive that just didn't quite make it: Truck & Bus, Fort Wayne isn't really that far from Detroit!Ford: Billy Ford once again, and it seems perpetually, convincing his doubtful relatives not to sell their preferred stock. I give VW a 50/50 shot at buying out Ford; a family buying out another family.Tesla: Straight from Elon: "My Tesla has hidden compartments for handcuffs, ask my latest girlfriend where they're located"Stellantis: Get used to flying to Schiphol. You'll have luggage, lots of luggage.None of the Big 3 will ever admit they were wrong. Tesla will just keep gaining market share.
  • SCE to AUX A question nobody asks is how Tesla sells so many EVs without charge-at-home incentives.Here are some options for you:[list][*]Tesla drivers don't charge at home; they just squat at Superchargers.[/*][*]Tesla drivers are rich, so they just pay for a $2000 charger installation with the loose change in their pocket.[/*][*]Tesla drivers don't actually drive their cars much; they plug into 110V and only manage about 32 miles/day.[/*][/list]
  • SCE to AUX "Despite the EV segment having enjoyed steady growth over the past several years, sales volumes have remained flatter through 2023."Not so. How can EV sales be increasing and flatter at the same time? and H/K/G are all up for EV sales, as are several other brands.
  • ToolGuy Here is an interesting graphic, if you're into that sort of thing.