GM Do Brasil: Clueless and Rudderless

Denise Johnson, poor soul, from the beginning crusaded against what she thought was a “lack of commitment” of GM’s top team. Apparently she also fought hard against what she perceived as her company’s products’ lack of quality. This internal struggle came to its flash point when she vetoed the launch of GM’s mini pickup, the Montana. Seemingly, she collided head on with GM Brazil’s Vice-President of Engineering, Pedro Manuchakian. For him, the trucklet was ready. Ms. Johnson thought otherwise and ordered improvements. This delayed the pickup’s launch by two months. This weakened her position as Detroit stupidly became unhappy at the extra expenses and higher costs incurred.

So, having invoked the wrath of her Brazilian staff and displeasing Detroit, she decided she had had enough. With a career of over 25 years at GM North America and witnessing firsthand US GM’s fall from grace, she could tell what an uphill battle she faced. Unwilling to risk her name on what she perceived as inferior products she threw in the towel.

The aforelinked Bestcars article tells us a little about Denise Johnson. She rose to the top from the technical side of the company. She has a degree in Mechanical Engineering from Michigan State. She also acquired two Master’s from MIT (in Mechanical Engineering and Business Administration). She was well equipped to talk and discuss her company’s products from the technical viewpoint. That was her downfall. She was unwilling or unable to just applaud and let things roll. Her knowledge led her to rebel against Detroit’s master plan for its South American goose of golden eggs.

Ms. Johnson could see that GM do Brasil’s recent course is plain wrong. The competition is advancing in leaps and bounds. Fiat’s new Uno and Palio (plus derivatives) are at least partially based on Fiat’s new worldwide new compact car platforms. Fiat’s new lines of engines, the Fire Evo and E-tor.Q are thoroughly modern and are almost universally praised. VW has the new Gol, which uses the Polo’s old Euro-platform (as does the Fox). A big advance from a company that up until a couple of years back offered this FWD, compact car with a longitudinal engine (a contradiction the original Mini put to rest oh so many years ago). It also retired (finally) the AP line of motors and launched the EA line. Even Ford, the forever slow child of the Big Brazilian 4, has presented the new Fiesta, not to mention it’s slowly but surely abandoning the old Zetec engines for the much more modern Sygma mills.

GM? Well, it relies heavily on Celta, Prizma and Classic sales. These cars are nothing more than Corsa reduxes ad nauseam. The Corsa of 1992 mind you. Thoroughly modern in 1990. Nowadays? Coupled with an engine that could trace its roots back to the one introduced in the Monza in the 80s, GM is at least 15 years behind the times.

Ambitious and ultimately blind cost cutting has also led to a deterioration of build and parts quality. Brazilian consumers are absolutely not as demanding as American ones, but even they can see how far back GM has gone. Get inside that Corsa 92 and get inside a Celta 2011. All the original shortcomings are still there (lack of space, pedals completely offset, which force an unnatural and tiring driving position, no place to rest your left foot, no place to put your odds and ends). The fit and finish is unbelievably worse. Just compare the fabric present on any old Corsa’s seats. Now compare that to the Celta’s. The prosecution rests its case. For a few seconds …

As to GM’s recent launches, the Agile and Montana…Well so unfortunate. Neither have broken into the top ten cars sold. The Agile is outsold by the Palio, the old Fiesta, VW’s Fox. Not to mention that even Renault’s Sandero is breathing down the allegedly Agile’s back. The Montana is outsold by Fiat’s Strada at a rate of 3 to 1. Could GM possibly be happy with these results? Though both offer Brazilians some extra space, both suffer from well-known and terrible finishing mishaps and very so-so driveability. Yes, GM, Brazilian consumers have noticed. They don’t seem too awed now do they?

GM do Brasil seems determined to take this as far as it can. Convinced this is the only way to remain profitable, they ignore the competition’s advances at their peril. Denise Johnson saw this. She fought against it. She lost. The current team can go on their merry way. They can forget that January and February of 2011 have shown that GM has lost two points in market share over the same period last year.

As VW is preparing a re-designed Gol and Fiat is readying the new Palio and Siena, GM seems to have nothing. Having lost heir traditional buyers to the Japanese (and Hyundai) and competing now in the lower rungs of the market with noticeably inferior cars, relying just on price, promotions and cash-on-the-hood schemes, GM do Brazil’s lot is oddly similar to the one experienced by GM of America in recent history. Weirdly, differently than in America where it wrapped itself around the flag, GM’s recent propaganda in Brazil has been to wrap itself around nostalgia. All GM commercials now show old Chevys along with the new one they are purportedly hawking, along with background music that modernizes old hits that remind (?) consumers of old jingles (sadly of course this does nothing for the younger crowd which don’t recognize the old jingles and in fact, for the most part, find recent Chevy commercials’ music perfectly cheesy).

However, like in America, customers are showing many signs they have tired of GM. Even GMs die-hard fans recognize that VW, Fiat, Honda, Toyota and even Hyundai have better brands (and are better value propositions). The question is: How long GM? How far down the road to oblivion are you willing to go? Have you a death wish? Or do you want to rely on China alone?