By on November 14, 2008

My colleague is hard at work debunking a GM-funded poll. It’s the latest weapon girding The General’s belt as it bolsters its claim on bailout billions. As several of TTAC’s Best and Brightest have already pointed-out, Motown’s strategy in this bailout push has been an enormous mistake. By publicly lobbying for taxpayers’ funds– without a concomittant PR campaign explaining their survival strategy– The General and the not-so-dynamic duo are advertising their incipient insolvency. In other words, if GM CEO Rick Wagoner’s right and “no one buys a car from a bankrupt car maker,” isn’t it also true, Mr. Wagoner, that only a slightly larger percentage of American consumer will buy a car from a carmaker that’s ABOUT to go bankrupt? To wit: “Do you believe that America’s automakers will face bankruptcy without government loans?” the Peter Hart poll asks. Sixty percent say yes, 22 percent say no and 18 percent don’t know. So 78 percent of respondents have a damn good reason NOT to buy an American automakers’ products. So why NOT file Chapter 11?

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21 Comments on “Tipping Point: 60% of American Consumers Predict Bankruptcy for Detroit...”

  • avatar

    I think you have a point RF.

    How much scarier is it to buy from “Generally bankrupt Motors” as “Officially Bankrupt Motors”.

    No difference to me.


  • avatar
    Richard Chen

    Reflecting this sentiment, editorial cartoonists are having a field day over at Not much sympathy there.

  • avatar

    Any predictions on the year-over-year monthly sales drops we will see through the 4th quarter and into the 1st quarter of ’09? I have to believe GM’s will be in the 40-50% range for the reasons mentioned in the post. (not to exclude the overall economic mess, tight credit, etc.)

  • avatar

    GMs flawed strategy in this latest debacle is yet another symptom of the biggest problem with Wagoner at the helm – no leadership, vision, direction, or coherent strategy for pretty much anything. Rick Wagoner has been so focused on GM’s stock price that he has neglected the very reason for the stock’s rise and fall – the company and it’s products. That fundamental error and his uninspired managing (I won’t call it leadership) has ended any possibility of GM returning to it’s glory days of past. He just doesn’t get it – the 1950s and 60s are over.

    This bailout push is GM’s attempt to have it both ways. They want to fool America (and the world) into thinking that all is well and under control, and yet they want the bailout money. So which is it?

  • avatar

    I hope Red-Ink Rick was paying for this out of his own pocket, because if I were an engineer knowing my evaporating development budget is being squandered on frivolous, biased, pointless polls, I’d go through the roof.

    GM would buy significantly more credibility if they’d show us their plans for survival. Maybe it’s the lack thereof that they’re scared of.

    BTW… where the hell did they conduct this poll – Dearborn? (Check the vehicle ownership stats on Page 5)

  • avatar

    Note: Tipping Point of ~Surrender-territory for any armed force being around the 50% loss area, so good call.

  • avatar

    Didn’t we decided already its time for GM (and Ford and Chrysler) to file Chapter 11? Lets discuss afterlife (I mean after Ch 11).

  • avatar

    EXACTLY – At GMI there was a comment from a person who asked a friend about buying a new Impala. The friend works for a GM supplier – the reply was why would you buy an car from a company that may go out of business? GM’s 3rd Quarter announcement and the never ending stream in the media re: the current financial peril of GM, Ford and Chrysler means in most consumer’s minds that these three companies are bankrupt in all but name.

  • avatar
    Dr Lemming

    I’d disagree that GM management doesn’t have “vision.” They do. It just so happens to be too little, too late. These guys are incrementalists.

    Here’s the thing: If Wagoner died in his sleep tonight, his successor would likely be inclined to favor stay-the-course policies if he comes out of the GM’s American bureaucracy. And even if he hadn’t had independent thinking beaten out of him, internal governance processes are riddled with enough political speed bumps to water down whatever bold new ideas he came up with.

    Changing organizational culture is exceptionally hard. In the US we tend to forget that because the media tend to focus on the cult of the personality.

    Now that the public is up to speed on GM’s difficulties, bankruptcy is arguably the least challenging p.r. strategy. Every additional day of bad news coverage undercuts the argument against bankruptcy.

  • avatar
    Old Guy Ben

    Or to put it another way, why should you buy a vehicle from a company about to get a bailout?

    Some folks (and it makes sense) think that Congress may do something along the lines of ‘buy a Detroit car and get $3,000 off your taxes’ or whatever. Same thing as a stimulus check, but one that is specific in that you have to buy a car.

    If they are going to do this, say on January 21st, well, I wouldn’t wanna be the person who bought a car in December.

  • avatar

    If they are going to do this, say on January 21st, well, I wouldn’t wanna be the person who bought a car in December.

    If they advertise that this is what they will do, there won’t be any car sales in December and early January. Hey, there’s an idea for a rumor…

  • avatar

    Good points. Much like the financial markets “froze” waiting for the bailout, most people will not touch a Detroit product if they think tax refunds or slashed prices are coming (and that’s assuming the B2.8 stay in business). The rest of the car buying public won’t touch a car if they think the company is going under.
    Damned if you do, damned if you don’t, so just DO already!
    At least that way, somebody will have their concerns allayed and might start buying again.

  • avatar

    My dad needs to buy a new car (or used) and we come from a GM family. However, his 2001 Impala has had many problems and the local dealer is as sleazy as they come. Although he wants to buy a domestic (made in Canada qualifies), I’ve managed to convince him that the warranty from GM might not be worth the paper it is printed on. He’s shopping solvent manufacturers.

  • avatar

    Rick Wagoner has been so focused on GM’s stock price that he has neglected the very reason for the stock’s rise and fall – the company and it’s products.

    And how’s that much different than any other CEO in Corporate America? It reminds me of college. They construct a system whereby students live and die by GPA, yet those same students are supposed to feign disinterest in front of professors who in turn pretend that the pure quest for knowledge is what really motivates all the little undergrads.

    The corporate system is designed (and bound by law) to maximize shareholder value. The gauge is the stock price. When times get tough (as they are now) the CEO doesn’t always have the luxury of long term vision. He’s gotta do what he’s gotta do.

    I’m not saying someone else couldn’t have done a better job. It’s just that GM needed nothing short of a superman when Rick took the helm, and they aren’t too many of those out there.

  • avatar
    Old Guy Ben

    I think it may be sooner than we think. They’re already ‘testing the waters’

    Today at a suburban Maryland dealership, Sen. Mikulski proposed granting a tax incentive for consumers who purchase a new car or truck. New vehicle owners would be able to temporarily deduct sales and excise taxes as well as interest on auto loans from their income taxes.

    link to NADA article

  • avatar

    I’d like to see someone come out with a Fake Rick Wagoner Blog, written with the wit that Dan Lyons put into his Fake Steve Jobs blog. There would be plenty of material to work from.

  • avatar

    If 60% of the population expects D3 bankruptcy, then the tipping point has been reached. Nothing is to be lost market-wise; might as well file and grab a chance to rebuild.

    Everybody ought to go to that cartoon link Richard Chen provided. Funniest batch of cartoons I’ve seen in years.

  • avatar

    BTW… where the hell did they conduct this poll – Dearborn? (Check the vehicle ownership stats on Page 5)

    Chevy alone outnumbers Toyota, no Scion owners…doesn’t match actual buying patterns.

    Anyway, their questions related to the Not So Big 3 “going out of business”. Chapter 11 doesn’t mean “going out of business”. Further, questions about whether one “favors” a “bailout” seem rather poor. I’ve already posted that I favor a bailout only if (necessary but not sufficient) the existing management is shown the door (I’ll settle for Red Ink Rick and every single one of his direct reports). I’m coming to the view of the Guest BK Attorney that C11 should be another bailout condition. So do I favor a bailout? “Yes”…but not on the terms Red Ink Rick is proposing.

  • avatar
    Gardiner Westbound

    I won’t buy a Desperate-3 car regardless. Been burned too many times.

  • avatar
    Dr. No

    The fact is, GM has made some positive strides. The fact is GM has a top flight Silverado, Malibu, Corvette, and others.

    But I agree Wagoner needs to go NOW, along with his other incompetent minions to fix the rest of the line-up and prune the General’s fruit tree.

    Sadly, it’s not been enough to change the perception. Perception is reality. TTAC has created it own fair share of the perception. Breaking: It’s Death Watch 1xxx!!

    I say this: Bankruptcy will kill GM. Period. If there are no loans from U.S. Government for GM, the stock market will sink. And we’ll have Depression II, or something close to it. No advertising. Hmmmm….

    Be careful what you wish for. You could be next.

  • avatar

    So why NOT file Chapter 11?

    Because that would mean actually making necessary changes in the way they operate. Something that, with few exceptions (Ford), hasn’t happened in 30 years.

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