By on May 29, 2013

There is more chaff ejected from GM’s media department than from an airplane under missile attack. Sifting through the chaff, one finds a message that is the same as it was for decades: Things will be great real soon now, promise. Leave it to Fortune to present three questions GM should ask and answer (don’t hold your breath) :

Question 1: “ What is our corporate competitive advantage?” Fortune: GM is a huge company, but both Ford and Volkswagen make better use of their enormous scale with platform efficiencies. GM builds well-made vehicles, but its reputation for quality and reliability can’t touch Toyota’s or Honda’s. Nor, when customers go looking for the leader in safety, technology, or fuel economy, do they make a GM dealer their first stop.

TTAC adds: I like to listen to questions asked by journalists. They show what’s on their minds. These days, they more and more ask how a car company compares to Volkswagen. Nobody ever asks to benchmark GM. Both Volkswagen and Toyota treat GM as if it does not exist. Volkswagen wants to beat Toyota. Toyota rarely if ever mentions a competitor in public. In private, they mention Volkswagen a lot, and Hyundai on occasion. GM? Never.

Question 2: “Where are we the world’s best?” Fortune: Probably only in niche categories like large crossovers (Chevy Traverse, GMC Acadia, Buick Enclave) and full-size SUVs (Chevy Suburban, GMC Yukon, Cadillac Escalade). Cadillac is a rising star in the luxury passenger car segment but still can’t touch the Germans, and Ford remains the pickup truck leader until proven otherwise. Everywhere else, GM is an also-ran.

TTAC adds: I think Fortune is too kind.

Question 3: “Who are we going to pick to succeed chairman and CEO Dan Akerson?” Fortune: Akerson, 64, has signaled that he plans to leave within three years, but GM’s bankruptcy and downsizing wiped out a whole generation of executives who might logically have followed him. As a result, the leading inside contenders are relative youngsters: vice-chairman Steve Girsky, 51, product development chief Mary Barra, also 51, North American boss Mark Reuss, 49, and CFO Dan Ammann, 41.  

TTAC adds: Picture any of them next to Ferdinand Piech, and Akio Toyoda.

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30 Comments on “Three Questions GM Should Answer...”


  • avatar

    If you repost the the 3-part on Lt. Dan’s incompetencies I’ll read it again.

  • avatar
    hp

    Nobody, with any sort of memory, takes GM seriously because they already lost. They are like the kid on the baseball team that didn’t get picked but the parents made the coach put him in, and the other players must play with him. No respect left.

  • avatar
    raph

    I thought Mark Ruess was under consideration for being the next guy? I know GM is to labyrinthine for them ever to consider going outside the company which is a shame since it would probably do wonders for their image.

    I also find it interesting that Fortune just sees them as a truck company even while mentioning niche products. The Corvette certainly is and I’d say its pretty spectacular when you start getting into the details. An all aluminum chassis that rivals the stiffness of the prior steel chassis, cast composite brake rotors, advanced damper technology and so on.

    Sigh… I have to admit I secretly want GM to fail just to see how bad it would be for the US just so I could see everybody cheering for its death one day and standing in an unemployment line the next.

  • avatar
    Erikstrawn

    I seriously think GM’s new long-term strategy is to become a Chinese car company. I’m not sure if they have a follow-on strategy to that other than:
    1) build market share by buying out brands with a strong customer following
    2) limit costs by only making one car and selling it under the new brand names
    3) sell cars at a loss to retain market share

    • 0 avatar
      NMGOM

      Erikstrawn – – –

      Did I not read somewhere that GM was projected not to be able to survive in its current form beyond the year 2020?

      Perhaps your comment about Chinese ownership is the way that will happen?

      ——————

  • avatar
    wmba

    Well, I don’t know what any of those GM types actually looks like.

    Ferdy will croak soon and as a private individual I feel absolutely no need whatsoever to feel in awe of the man – he was in charge of that project known as Operation Lemon, the Audi 100LS, which I had the misfortune to own. I read here that he doesn’t think much of it either. Gee thanks Ferdy for admitting your mistakes and then following it up by allowing that other parody of reliability, the Audi Fox to come to market. Now go back and order all your troops to jump through hoops for exercise, that’ll teach them who’s boss. Gronk.

    Akio, on the other hand, is the lost waif and minor aesthete blinking nervously in the artificial light and having a feeling, just a small feeling, mind, that maybe cars should be just a bit interesting to drive. When senior Toyota management let him out of his room for afternoon tea, overwhelming urges then come over him to go out and drift an 86 around the parking lot before supper. After which it’s time for TV.

    Really, trying to belittle GM because its up and comers might be lightweights facing the Mighty Piech and Samurai Toyoda is an old kind of trick. It has no basis in fact, just imagination. We have no idea what Reuss (or anyone else) might be like once put in charge. He could well cone to dwarf the other two, or not. Akerson though is just a petty corporal, oops sorry, lieutenant with demonstrably proven zero talent and a tendency to bloviate, so there had better be a Palace revolution soon or it may be too late.

    • 0 avatar
      Lorenzo

      Ferdinand Piech just turned 76. Ferdinand Porsche died at 76, but his daughter, “Ferdy’s” mother, lived to 94. With modern medicine at his disposal, Ferdinand Piech could probably make you wait another 20 years-plus for his demise.

  • avatar
    tikki50

    Personally I think where GM stands today is the right track, keep your head down, people are still bashing them as Government Motors. I would think they don’t want to be out in the front row beating their drums. I wouldn’t want to be. I’d slowly take back market share and win customers back over the hard way, with quality products. So if they are not out in front, Im good with that. As stated in the article I would label these companies that pay no attention to GM idiots. It’s not like GM sells only a few cars. That kind of ignorance will sink a company.

  • avatar
    stottpie

    please correct me if i’m wrong, but wouldn’t GM be considered to sell more trucks if you combined sierra/silverado?

    • 0 avatar
      mikey

      The F150 outsells the Silverado/Sierra,but not by much. GM also sells Camaros and Corvettes and a whole lot of smaller CUV’s.

      As Bertel tells it, Toyota and VW could care less.

      • 0 avatar
        DasFast

        In the name of making sense and being grammatically correct, it is COULDN’T care less. Could care less means Toyota and VW care.

        • 0 avatar
          mikey

          @DasFast….So sorry…I’ve offended the grammar police.

          You and everybody else, knew exatly what my meaning was.

          I’ve been posting comments at TTAC for about eight years now. I’m fairly confident that none of them have been grammatically correct.

          Spelling,sentence structure,and grammar have never been my strong point. I’m so happy that someone as perfect as yourself took time out of thier busy day,and pointed it out to me.

          • 0 avatar
            KixStart

            mikey,

            Has it been eight years? My goodness, time flies when you’re havin’ fun.

            Technically, GM’s pickups are probably about on par with Ford’s but I think “EcoBoost” gives Ford the mantle of leadership. I don’t know if it’s effective in improving the fuel economy vs. power relationship but it seems bold when stacked up against GM’s VCM. I think bold sells.

          • 0 avatar
            sunridge place

            Some people like to pick and choose ‘leadership’ by sales or reputation whenever it is the most convenient.

            In trucks, Ford led combined Silverado/Sierra in 2012.

            In trucks (Silverado/Sierra/F150)for 2012, it was 645,000 units for Ford and 575,000 units for Chevy/GMC.

            If you take the truck platform and extend it into full size SUVs (Tahoe, Suburban, Avalanche, Expedition, Navigator etc) then GM wins 2012 with 790,000 units versus Ford’s 692,000 units.

            Both companies are printing money in these segments.

            The fact that Fortune tries to call large crossovers a ‘niche’ segment tells me a lot about the knowledge of the author of this article.

  • avatar
    ellomdian

    Ferdinand Piech and Akio Toyoda? GM Needs a Ghosn more than a “Legacy” style CEO.

  • avatar
    John Franklin Mason

    Thing is General Motors has not been the worlds leading automobile manufacturer it once was for over twenty years however it is a viable player.

    Cadillac’s star is rising fast setting a new “Standard” bringing joy to the world and fun where the rubber meets the road. The Corvette Stingray is just dashing! In GM’s stable there are the good, the bad and the ugly but that is the risk a company takes.

    I am not saying that General Motors could not be better, every single company out there could be better but everyone can not be the leader. General Motors lost it’s leadership role long before the bailout and like with anything else it’s hard to regain the title.

    Up to the bankruptcy General Motors deserved the scorn it received but since the bailout General Motors has received more than it deserves due to political discourse mostly if not entirely.

    When the crap is about the “taxpayers dime” be mindful of the fact that millions of employees and retirees of General Motors, their suppliers and distributors paid or pay taxes and by being able to keep their jobs and retirement benefits those workers got their dime’s worth from those taxes.

    And do tell how much in Federal, State and Local taxes has General Motors paid during the one hundred years it has done business eh? The bailout should not be an issue.

    • 0 avatar
      Erikstrawn

      “Cadillac’s star is rising fast setting a new “Standard” bringing joy to the world and fun where the rubber meets the road. The Corvette Stingray is just dashing!”
      I’ve been hearing that since I was a kid, and it hasn’t made a bit of change in GM’s fortunes.
      “Up to the bankruptcy General Motors deserved the scorn it received but since the bailout General Motors has received more than it deserves due to political discourse mostly if not entirely.”
      GM has received undue political discourse? Their other option was to pack up and lose. It shouldn’t have been the government’s responsibility to save them. Pay the piper.
      “And do tell how much in Federal, State and Local taxes has General Motors paid during the one hundred years it has done business eh? The bailout should not be an issue.”
      When GM went bankrupt they owed more money than they’d made in their entire history! (I tried to find a supporting link quickly, but don’t have the time to keep looking.)
      “When the crap is about the “taxpayers dime” be mindful of the fact that millions of employees and retirees of General Motors, their suppliers and distributors paid or pay taxes and by being able to keep their jobs and retirement benefits those workers got their dime’s worth from those taxes.”
      GM should have taken care of their retirees, but instead they chose to raid the pension plan to pump up their stock. The suppliers aren’t the government’s responsibility. They’re private businesses, and it’s up to them to protect their employees by finding other buyers.

      Cheers!

  • avatar
    Dimwit

    I don’t know why everyone is so concerned about who is in the exec chair. The last two bum warmers have been outsiders and it looks ike it’ll probably be a third when Danno steps down.

    Since there isn’t a quality manager like Bill Ford behind the Board of Bystanders they’ll probably not be able to get someone with quality like Mulally so it will be another MBA special that can do the Board’s bidding. So… no change.

    • 0 avatar
      PrincipalDan

      I know an out of work MBA. Hails from Texas by way of Maine. His brother might run for President in 2016.

      (I kid, I kid. Can you imagine the freaking crap storm if the GM Board reached out to him… lol.)

  • avatar
    jimbob457

    Some years ago the second largest commercial bank in the US paid me quite well for a year to develop some metrics that would allow them to identify companies that were headed for bankruptcy – that would be ‘headed for’ NOT on the verge of. The final list involved longer term share price behavior, various financial ratios, third party assessments of their product quality, too much dependence on one product or customer or supplier. There were a number of others, and they differed somewhat from one industry to another. I worked backward starting with companies that had failed and doing the post mortems.

    In 2006 I was teaching an MBA course in finance. It occurred to me to present some version of this analysis to the class. So, I went to Yahoo Finance and just idly pulled up GM. Holy shit! Just from the share price behavior and financial ratios it screamed “Loser”. Digging deeper, almost everything I found looked bad (or from my perspective, good, since I was looking for likely bankruptcy candidates).

    When I stated my thesis at the start of class, there was almost an almost universal gasp of disbelief – GM??. Everyone could see my Exhibit A, which was GM’s share price cycling around $30 for decades during which time the USD lost about 2/3 of its value. Total return, which includes dividends, was way below average as well. Product quality? A few very good, some average, and a lotta dogs. Everyone had an opinion about some aspect. A great three hours. By the time I finished I had converted maybe half the students.

    Since its (in effect) bankruptcy, GM has improved its business model from archaic to better. What they don’t have is someone like the Ford heir to effectively represent the interests of ownership. That person may exist and be living today perhaps in Hong Kong or Singapore. Imo, effective ownership even if by the Chinese might be better even for Detroit auto workers than continuing GM’s long slide into oblivion.

    • 0 avatar
      NormSV650

      I also couldn’t see why someone would invest in GM stock during the 2000’s era, or any automaker for that matter. Though the dividends were really good at one time, even the threat of BK would only mean a restructuring and not a dissolving. Bonds might have been a different story but those that did really were taken to the cleaners.

  • avatar
    bd2

    Due to the anti-GM blinders, TTAC is under-evaluating GM’s profit centers in Cadillac and Buick.

    The combination of the ATS, new CTS, the XTS and the new Escalade will be profit makers for GM.

    The ATS and CTS will easily outsell Lexus’ IS and GS and once Cadillac starts to add to its CUV lineup, sales and profits will ensue even further.

    Same goes with Buick with the Verano and Encore, but when the Lacrosse and Enclave get redone and Buick adds a midsize CUV, sale and profits will also continue to grow.

    As for Chevy, GM stumbled with the Malibu in execution (and in Ackerson pushing for the Malibu Eco to hit the lots before the other drivetrains were ready), but Chevy has made significant inroads in the compact and subcompact car markets with the Cruze, Sonic and Spark and the next gen Cruze should be among the class leaders.

    As for the full-size sedan segment, the new Impala has been getting rave reviews (better ride and handling than the Avalon) and Chevy will have the SS for those drivers who are more enthusiast-oriented.

    The Camaro has been nothing but a success and the new Vette has all the markings of being one as well.

    • 0 avatar
      KixStart

      GM is still truck-heavy and, so far as I can tell, it’s still the deal selling the cars, rather than the cars selling the cars.

      Is GM actually making money on cars or do they still subsist on truck profits? That’s the $64 billion question. They couldn’t make money on cars before the Ch 11 and it’s unknown whether or not they’re doing it now.

      GM has a couple of high-profile problems, too.

      First is the Volt. We listened to non-stop reports about it for 4 years before they under-delivered on what they had over-promised. Sales are disappointing. They wagered a billion bucks on being able to grab a leadership position and get the (imaginary) green halo from Toyota and utterly failed. To attain the mediocre volumes they do get, they need $7500 in government bribes and then seem to be putting $6K of their own back into the pot.

      Akerson is now out over-promising the next version of the Volt. This probably won’t be pretty (no problem for Akerson, he’ll be gone). The one thing that can save Volt II is a much cheaper and more compact battery, which will be technology that GM does not own and is therefore available to all comers. If it’s really a good battery, Tesla II will improve, as will C-Max, Leaf, Prius, etc.

      Second is GM’s other “hybrids.” They’re abadoning the effective but extremely expensive two-mode and continuing to push the laughably ineffective BAS. It’s like a national engineering embarassment. Ford can do it; where’s GM?

      Third is Europe. There’s no easy solution there and the competition is very scrappy.

      You seem to be putting a lot of faith in things like Buick’s midsize CUV. Their other CUVs are not to be admired. I admit, they sell well, but it probably has more to do with terms than any technical merit. They’re heavy, large but with less interior room than the competition and their fuel economy is probably worst in class. If it wasn’t for fracking, they’d be toast.

      The Cruze is doing fairly well largely because Toyota decided that the 8 or so year old Corolla was good enough… and it largely is. Toyota will address that problem in their own good time.

      Favorable Impala reviews don’t mean much… Many a Car of the Year has gone down in flames.

      Cadillac and Corvette volumes aren’t going to sustain GM, either, unless they’re selling at very premium prices (I don’t see much evidence of that).

      It also remains to be seen whether or not GM’s latest cars hold up. GM has been promising quality for a loooong time and not delivering. This is about the 10th anniversary of El Lutzbo’s bold but wrong proclamation that GM was just as good as anybody. We’re still waiting.

      Nobody’s wearing blinders but somebody is wearing rose-colored glasses.

      • 0 avatar
        sunridge place

        ‘so far as I can tell, it’s still the deal selling the cars, rather than the cars selling the cars’

        What makes you think this when it comes to Cruze/Sonic/Spark along with Verano and a few other examples? Especially compared to the average/dreadful Cobalt/Aveo.

      • 0 avatar
        ect

        “Is GM actually making money on cars or do they still subsist on truck profits?”

        Actually, GM doesn’t make money on cars or trucks. GM doesn’t make money at all. The company suffered a huge erosion in gross margins in 2012, which resulted in a loss on operations of about $3 billion. Cash flow was negative by about $5 billion. For a company that had recently had its balance sheet wiped clean of debt by Chapter 11, that’s not good performance. At all.

        Whatever the perceived strengths and weaknesses of GM’s product portfolio, it is a fact that the company has been losing market share in North America since 1976. And has continued to lose market share since it was reorganized. Whether your product is good or bad is irrelevant if people won’t buy it.

  • avatar
    ect

    Question 3 is unfair, since it assumes that the successor must come from inside. If indeed the bankruptcy “wiped out a whole generation of executives”, that was a good thing. These were people who clearly were part of old GM’s problem, not new GM’s solution.

    GM has the option to pick a true outsider to succeed Akerson, as Ford did when they hired Mulally. Whiteacre and Akerson weren’t outsiders, just retired executives who were already GM Board members and had a lust to run the whole show – and without either the vision or the drive to effect the cultural and structural changes that were needed.

    GM, like Kodak, has been a completely insular organization, with a culture that accepts failure and doesn’t sufficiently value innovation.

    My fear is that new GM is too much like old GM, and presuming that Akerson’s successor has to come from within GM will not cure this disease.

  • avatar
    HiFlite999

    Overhanging the entire car market in the USA and arguably, China, is free money. That is setting up the next disaster, not just for GM, but for all the automakers. “Taking care of business” is exactly what GM needs to be doing right now, and largely is. The angry white men who invented “Government Motors” are dying off rapidly and will soon no longer be a factor in the market. At the same time, Cavaliers and their ilk are being crushed out of the collective memories of future car buyers. (GM trucks always were competitive.) Product lines are being vastly improved, while their Japanese competition remains stagnant.

    I don’t think that the outlook for GM is as bleak as many think.

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