Category: GM Death Watch

By on January 13, 2021



General Motors has rolled out BrightDrop, moving them further into the business of first-to-last-mile products, software, and services for delivery and logistics.

“BrightDrop offers a smarter way to deliver goods and services,” said Mary Barra, GM Chairman and CEO.

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By on January 6, 2021


Two Honda battery-electric crossovers will be built by General Motors in the next four years. A Honda will be built at a GM plant in Mexico, and an Acura alongside the Cadillac Lyriq in Tennessee.

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By on January 4, 2021

2010 Pontiac G6 in Colorado junkyard, LH front view - ©2021 Murilee Martin - The Truth About CarsWhen The General decided to eliminate the Oldsmobile brand— I’m still convinced that the main reason for the execution was the syllable Old in the marque’s name— the process took nearly a half-decade, with nostalgia-drenched “Final 500” editions of the last Oldsmobile models released with great solemnity. Even the ho-hum Silhouette minivan got a Final 500 version for its sendoff. When the Pontiac Division’s time came at the close of the 2000s, the 84-year-old marque was shoved out the door to stagger to an ignominious death, unloved and alone in a Michigan drainage ditch. Here’s one of the very last Pontiacs ever built, found in a Denver boneyard last month. Read More >

By on June 8, 2020

2008 Pontiac Solstice in Denver junkyard, RH front view - ©2020 Murilee Martin - The Truth About CarsQuick, what was the final new Pontiac model introduced before the marque’s demise in 2010? The G3, a Pontiac-badged Chevy Aveo (itself a rebadged Daewoo Kalos, which makes The Final Pontiac first cousin to the Ravon Nexia R3). We remember a Pontiac model from slightly earlier in the chaos of mid-to-late-2000s GM much better: the Solstice, a mean-looking sports car that showed great promise but went down with the Pontiac ship in 2010.

I saw my first discarded Solstice last year in Colorado Springs, and now I’ve found this much cleaner one in Denver. Read More >

By on February 23, 2017

2017 Chevrolet Cruze Hatchback LT Front 3/4, Image: © 2017 Mark Stevenson/The Truth About Cars

It wasn’t long ago that the Detroit Three were fending off the Japanese on home soil as the Land of the Rising Sun cranked out reliable car after reliable car for the American masses. Then came the Koreans — Kia and Hyundai — who brought over cheap metal to win market share but quickly turned around their quality and reliability woes and produced some of the best products in the industry.

So why is it that, after 108 years of building automobiles, General Motors still manufactures abysmal garbage?

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By on May 23, 2014

Department of the Treasury

Back in 2004, perfectionist homemaker and well known TV personality Martha Stewart was charged with insider trading. As presented, the facts in the case were simple. Martha owned stock in a medical research company called ImClone and, like a lot of people who invest in tech firms, she was hoping for a big payout when their product, a promising new cancer treatment, went on the market. Unfortunately, the FDA chose not to approve the drug and the value of the stock looked set to take a beating once the decision was announced. According to the charges initially brought against her, Martha and many of the company’s top executives learned of the FDA’s decision though their inside connections the day before it was publicly announced and were able to sell their shares before they crashed. That’s against the law and many of the people caught up in the scandal, including Martha who was convicted on the charge of making false claims to a federal investigator, ended up going to jail. Read More >

By on November 1, 2013

Photo courtesy of

So I read earlier this week that Bob Lutz is saying that the US Government killed Pontiac. He says that GM had big plans to rescue the struggling brand with innovative, rear-wheel designs that included small performance cars that would have set the Germans back on their heels. Had these plans come to fruition, he hints, enthusiasts would have been busting down the doors and the brand would have quickly returned to good health. Sounds like new golden age for Pontiac was just around the corner. And it would have worked too, if it weren’t for those meddling Feds. That’s what Bob says anyhow, but I’m not so sure. The way I remember it, I had a hand in killing Pontiac, too. Read More >

By on October 13, 2010

According to our latest sales data, the Detroit Three have enjoyed something of a comeback relative to the “foreign” competition this year. And though it’s not clear how long that trend will last, the media is catching the Detroit-boosting bug again.  The NYT’s Bill Vlasic epitomizes the mood, focusing on improvements in GM and Ford’s products in a piece titled American Cars Are Getting Another Look. Between IQS score improvements and anecdotal evidence of consumer interest in Ford and GM’s “gadgets” and “value,” Vlasic’s sidekick, Art Spinella of CNW Research, forwards an interesting theory for the death of the “perception gap” (a construct he helped create, by the way):

Ford has become almost the ‘halo brand’ for G.M. and Chrysler. Because of Ford’s success, people are less resistant in general to considering all of Detroit’s products.

Well, that’s not the dumbest thing ever said about the destruction of the perception gap… but it sure is a head-scratcher. Did Nissan and Honda just spend the last several decades skating by on Toyota’s sterling reputation (RIP)? Still, it might be interesting to hear Ford’s perspective on all this.

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By on June 1, 2009

GM filed for bankruptcy today. From now on, TTAC will chronicle GM’s fortunes under the series name bestowed upon post-C11 Chrysler: Zombie Watch. For there’s no doubt in my mind that GM will not recover from its federal stewardship to emerge, as Dan Neil puts it, “smaller, leaner, smarter and hungrier.” Sure, I’ll spot Dan smaller (obviously). Leaner? An efficient government-funded company is an oxymoron to rival military intelligence. Speaking of which, smarter? GM is as far from smart as Steven Hawking is from professional wresting. In fact, listening to GM CEO Fritz Henderson bleat to the press today, it struck me that the automaker is pulling a Mark Mothersbaugh: it’s de-evolving. Less obscurely, the company is actually getting stupider.

To wit: when Bloomberg asked Fritz whether there would be any changes to post-C11 GM’s corporate culture (i.e., when would someone shit-can the overpaid yes men and women who’d run General Motors into the ground), Henderson said there was no need for an executive cull. “Natural attrition” would ensure fresh blood. Well, he would say that, wouldn’t he? After all, any such overdue housecleaning would start by sweeping Fritz Henderson out with the rest of the garbage hanging around RenCen (e.g., HUMMER).

Even so, it was a stunning admission that all that talk about GM’s preparations for a government-backed renaissance—trimming dealers, reigning-in the United Auto Workers, softening-up bond-holders, etc.— was complete and utter horseshit. More specifically, Henderson was spouting the same crap GM’s been foisting on shareholders since Nikita Khrushchev used shoe-leather to pound home a point.

The truth: GM’s management still doesn’t have the slightest idea how to right the sinking ship—sorry, raise the Titanic. Henderson point blank refused to specify a deadline for a return to profitability. No goals. No timelines. Nada. If I didn’t know better, I’d think Rick Wagoner’s hand-picked clone/successor was trying to give this GM Death Watch series closure, in that “here we are at the beginning again” way. But no; there is no plan.

Now you could say that Henderson can’t formulate a plan. It’s up to the next GM CEO—the one appointed by the same presidential administration that fired the old CEO and swears up, down and sideways it doesn’t want to run GM—to devise a detailed strategy for returning some $50 billion dollars to American taxpayers. And those pesky bondholders. To which I’d reply, sure; what’s the hurry? We’re from the government and we’re here to—say, are those fresh donuts?

More evidence of increasing numb-nuttide: on this historic day, GM signaled recently dismissed dealers that they company will honor their franchise agreements until they expire (Oct. 31, 2010). Huh? If GM doesn’t terminate the franchisees before exiting federal bankruptcy, they’ll lose the chance to do so without legal repercussions. The abandoned dealers will live to fight the “new” GM in all 50 states.

In other words, even Chrysler somehow managed to get it right where GM continues to get it wrong. Of course, both automakers are missing the golden opportunity to tell the United Auto Workers to FO&D. Damn! I forgot! This is a government-sponsored bankruptcy. When the feds pull the strings, the union owns you. Literally.

Meanwhile, and lots of it, the mainstream media seems obsessed with the idea that President Obama’s minions will force the automaker to build shit boxes to appease the environmental wing of the democratic party, and, thus, drive GM into bankruptcy. Oops. I should have said “continue to suck-up taxpayer money until British Leyland looks like a winning lottery ticket.”

It’s a ridiculous concerm. Government Motors has but one goal: nothing. Remember? No deadline. No timeline. Nada. Which makes a mockery of the most important part of Neil’s post C11 prognostication: the hungry bit.

Simply put, governments are not profit-driven. At all. On any level. Ever. So it doesn’t matter what kind of vehicles post-C11 GM manufactures. At all. On any level. Ever. Snap! That makes “new GM” the same as “old GM.” See what I mean about circularity?

OK, time’s almost up. How do I see this playing out?

Either the feds will sell GM to another automaker soon, or the feds will sell GM to another automaker later. By that I mean either Renault Nissan (or someone) will swoop in “to the rescue” (for bupkis), or the public will eventually grow weary of subsidizing Government Motors. At that point, Uncle Sam will jettison the public’s shares in GM for cheap. Some strip and flipper will buy it up and do what they do best.

In other words, one way or another, GM is headed for liquidation.

I’d like to say that this is the bankruptcy I recommended four years ago, which will allow GM to reinvent and reinvigorate itself. But it isn’t. So I won’t. I’ll just say so long and thanks for all the Corvettes. Although the interior still sucks.

By on June 1, 2009

GM was a politburo building cars. GM died for the same reasons that the Soviet Union died: because it killed initiative and proved unable to manage its resources at a pace that matched competing economies. Just as the Soviet politburo promoted the party faithful, demanding adherence to the party line, GM management brooked no discontent, and would get rid of any dissenting voices, banishing them to the corporate equivalent of Siberia: away from RenCen. The Soviet Union destroyed itself because of its unwillingness to accept reality. Spending untold billions on a show military force, it starved all other facets of its economic life. The Soviet leadership also accepted incredible inefficiencies in its production apparatus and failed to exploit its vast reservoir of natural resources. Ditto GM.

Among car makers, GM at one time had the size of the Soviet Union among nations (Russia alone covers 13 time zones). And just as the Soviet Union proved too big to manage, once the frailties had been exposed, GM also proved unmanageable, having been set on a course of self-destruction years ago. The leadership was unwilling to turn away from its crash course; that would have meant accepting they were wrong. The Soviet Politburo was never wrong. GM leadership was never wrong.

These were self-evident truths and had to be accepted. Filling its organization with sycophants and nodding-heads, the GM leadership willfully remained oblivious to the changing world outside its walls. Occasionally, demonstrating the obduracy and carelessness of Soviet leaders, they would dismiss what other car makers were doing, often ridiculing initiatives that would later prove their own undoing.

Living in the false security that they could always slap around any dissenters in their own ranks, thus ensuring discipline, GM let “too big to fail” cloud its judgment. The adage “What’s good for GM is good for America” permeated the walls, and allowed the company to grow complacent and ignorant.

Case studies will be mining the GM example in years to come, just as scholars of politics and international relations are still trying to come to grips with the fall of the Soviet Union. It’s worth remembering that until just a few months before the Soviet Union fell apart, the CIA and other intelligence bodies around the world were convinced no such thing would or could happen. This was because they and the nations and militaries they served, were dependent upon a strong Soviet Union for their own reason for being.

Likewise, with GM, we have seen a skull-clanking failure to accept the truth not just inside GM, but in the surrounding world. Corporate ignorance results when companies operate with blindfolds. It results in organizations that are change averse, and that think strength lies in never questioning its few basic tenets of faith.

One could claim that the fall of the Soviet Union was the result of bad engineering and outdated technology. If the place had been better run, if it had been in the hands of forward-thinking people, who allowed initiative and rewarded successful solutions, then we might not have seen the dissolution of the Soviet communist empire.

While the Soviet politburo devolved to cant and polemic in the service of a failed ideology, the GM politburo resolved to make money by financing cars that were subpar. Both believed propaganda could make up for the flaws in their products. Towards the end, GM was channeling hundreds of millions for campaigns that sought to establish differences among car platforms that were obviously similar to any outside observer.

Both organizations failed to “walk the talk.” The Soviet leadership rewarded itself with an opulent lifestyle completely divorced from the realities of life for ordinary people. In the end, the dissonance became impossible to hide or defend. Special auto routes for the apparatchiki through major cities; special airports; secluded residential areas; segregated shops and resorts—all contributed towards telling the Soviet “nomenklatura” that things were just fine.

Similarly, operating out of RenCen, the GM apparatchiki had also locked itself in a bubble. Occasionally, pronouncements from the elders would reveal how out of touch they were. Rich people didn’t care about the price of gasoline; global warming was a crock of shit; and it was hell to be standing in line at the airport, waiting for a flight.

The last hand on the rudder at GM was that of an accountant, and his manifesto was a spreadsheet. As the bow of the leviathan they had constructed struck land, the members of the GM politburo looked up from the spreadsheet, cried out for the people to save them and then abandoned ship.

The individual republics of GM, the car brands, have been left to their own. Some will disappear, a few will reconstitute themselves. All should curse the politburo that destroyed them.

By on June 1, 2009

How do you write an obituary for an entity that’s been dead for seventeen years? Like that high-school Biology frog-leg experiment, GM’s twitching since 1992 was due to externally administered stimuli. Yes, I would have much preferred to write GM’s obit in ’92. Back then, the guilty party was merely GM’s brain-dead management. It would have been easy just to rag on about all the lame cars they built. But it’s become a lot more complicated and uglier. Now we all have blood (and red ink) on our hands. And it’s not going to wash out easily.

While we rub on our damn spots, let’s refresh our short collective memory. In 1992, GM posted a $23.5 billion loss, coming off multi-billion dollar losses the year before. It was the culmination of GM’s most disastrous decade ever. Market share collapsed from 45 percent in 1980, to 34 percent in 1989. Share price was down 90 percent from its all-time (adjusted) peak of $358 in 1965. GM’s bonds lost their vaunted AAA rating. The whiff of bankruptcy was in the air. If only the plug had been pulled then. It would have spared us all hundreds of billions and untold agony, not to mention well over 250 General Motors Death Watches.

Up to ’92, it was pretty much all GM’s own (un)doing too, from Astre to  John Z. DeLorean. Nobody else to blame. Well, mostly, anyway. Some of the “artificial stimulus” had already begun, in the form of 1981’s Japanese (not at all) Voluntary Export Restraints (VER) deal. Denial and the blame-game were high on GM’s agenda, and curbing Japanese imports was going to fix Detroit. It turned into a classic example of “be careful of what you wish for.”

The Japanese responded with higher prices, and reinvested the resulting outsized profits in Lexus and Marysville, Ohio, among others. Is that what the Motown boyz had in mind when they beggared Washington for relief? And who paid for it all? The consumer, of course. Japanese car prices jumped some 15 to 30 percent during the VER era; Detroit’s, not. Somebody was paying for the development costs of that Caddy-killing Lexus LS400.

The Lexus was overkill anyway; by 1985, the pathetically-shrunken Cadillac DeVille was just a mutated Chevy Celebrity. This self-inflicted damage was mortal, too. GM’s premium brands had been their money printing press since the 1920s. Reel in the consumer in with a cheap Chevy, but make the killing when they trade up.

GM could live with Ford or Plymouth getting into Chevy’s pants once in a while, as long as Mercury, Edsel, Lincoln, DeSoto and Chrysler kept their hands off their “golden girls.” Having managed to keep them chaste for decades, they proceed to royally fuck themselves with ugly look-alike dwarves in 1985. I could go on (and have), but need I say more to explain GM’s death as an auto-maker in 1992?

Going forward from 1992 is an oxymoron. Since the mid eighties, the domestic automobile industry, as well as much of the domestic economy, has been all too heavily influenced by government policy, or the lack of it. What might have seemed good for the US might have also seemed good for GM, but . . .

Let’s call the lack of political will to implement a steadily rising gas tax to curb demand and stimulate long-term investment in an appropriate (and stable) fleet mix of vehicles Exhibit A. Alan Greenspan’s repeated downward pressure on interest  rates in the face of both the stock bubble of the late 90’s and the subsequent real estate bubble makes Exhibit B.

The explosion of the financial sector due to the low interest rates and the lack of regulation or enforcement is “C.”  American’s eagerness to slurp up the resulting brew of over-leveraged mini-MacMansions and oversized SUV’s with which to make their forty-mile commute is Exhibit D.

The end result: an epic F.

This unsustainable potion of cheap gas and cheaper money created the Zombie Three, with GM at the head of the pack. Even during those boom SUV years, GM’s cost structure and low transaction prices on cars resulted in profits from vehicles that were dismal, at best. In a decent year, like 1996, GM’s North American operations had a 0.8 percent return. What profits GM booked during these past seventeen years were primarily from financing and whatever overseas operations were having a good run, for the moment.

Yet investors were still willing to pay $100/share for a company that couldn’t make a profit on a car. Artificial stimulus indeed.

Meanwhile, it’s no secret that Toyota and Honda were generating around 70 to 90 percent of their global profits out of the US market alone. By building cars and light trucks.

Reality’s last hope would have been C11 in 1992, restructure oppressive union contracts, and hire Roger Penske to vacuum the tubes from top to bottom. Oh, and a tax-stabilized price of gas. And a genuine, effective national health care policy. And a responsible financial industry. And a functioning regulatory system. And awake consumers. And . . . so much for wishful thinking.

The inconvenient truth: for decades, GM has not been an automaker, but a wealth and capital-destroying dragon. Some $200 billion dollars in equity has been wiped out. Throw in another $27 billion in debt gone tits-up, as well as “your” contribution of some $45 billion: well over a quarter trillion dollars up in smoke. Where’s Saint George when we need him?

There was a time when we just said goodbye or good riddance to our failed companies. Studebaker was once the biggest wagon maker in the land. No more. Now we’re incapable of killing GM, and it’s too late to genuinely revive it. Just think up some new (electric) stimulus to keep it twitching.

It’s a waste of time and energy to blame GM for anything it’s done, or not, since its real death in 1992. Rick Wagoner’s immutable face is just another mask in our national tragedy play. Even worse, he’s what we see when we look in our collective mirror. In Pogo’s immortal words: “We have met the enemy, and he is us.”

By on May 27, 2009

The Associated Press called it: GM is set to enter popular parlance as “Government Motors.” When the automaker files for Chapter 11, the nickname will stick, as the debate over GM’s future centers on whether or not the United States government should own a commercial enterprise. To which the only possible answer is no. It was no back when President Bush over-ruled Congress and authorized the first multi-billion dollar “loan.” It’s no now, as the feds prepare to stump-up another $20 billion dollars to keep GM in business. There are lots of reasons why “new” GM is a bad idea. But here’s the most important impediment: Government Motors doesn’t have the vehicles it needs to survive.

Let’s assume “good” GM lowers its cost base to transplant levels and single-out the models that could give the post-C11 automaker a fighting chance. We’ll combine objective information (last month’s sales data) and some subjective analysis (the enthusiast’s perspective).

Although we’ve long argued that Chevrolet and Cadillac are the only GM brands worth saving, that’s not how Government Motors will roll. So we need to identify potential money spinners lingering within Buick, Cadillac, Chevrolet and GMC.

Buick is a lost cause. The “take a look at me now” brand stands for nothing, save God’s waiting room on wheels. In April, the LaCrosse and Lucerne sedans combined generated 1481 sales. That’s more than the Enclave (5,194 vs. 3,731), but less than Toyota Tacoma sales (8,925 vs. 9,027). I’m no fan of the Enclave’s exterior, but we’ve got to keep something. The Enclave stays.

There’s no nice way to put this: Cadillac is another dead brand walking. Last month, the “standard of the world” also accounted or less sales than Ye Olde ToMoCo Taco. Sales of all eight Caddy models combined clocked-in at just 8,337 units. Caddy has some new models in the pipeline, but c’mon. CTS Sportswagon? SRX replacement? While waiting for a flagship, the CTS is the only Cadillac vehicle worth saving, in terms of product excellence and sales (3,876).

GM’s volume brand is looking decidedly lackluster. The Impala topped Chevy’s sales chart in April at 17,532 units. The Malibu and Cobalt are next up, at 14,665 and 10,627 sales respectively. So, despite the fact that the Impala is a low-profit fleet queen and the Cobalt’s a POS, we’ll keep the old girl, the new ‘Bu and the crap ‘Balt. We’ll also hang onto the Camaro. Corvette? If you must. Volt? Cruze? Equinox? More pie-in-the-sky from America’s master BS baker.

Chevy trucks are still where the money is. Incentives be damned; 26,437 Silverado pickup trucks moved off the lots in April. I’m also liking the Traverse (8,204). By [literally] the same token, GMC should keep the badge-engineered Sierra (8,273) and Acadia (4,764), and stay the course with the Tahoe/Suburban twins (12,586 combined).

And there you have it: one Buick, one Cadillac, five Chevy cars, two Chevy trucks and three GMC trucks. Your list may differ here and there, but I reckon these are the eleven vehicles upon which taxpayers will risk at least $40 billion dollars. Which would be OK, if that was the long and short of it. But it isn’t. In fact, it can’t be.

As the New York Times recently asserted (welcome!), we can blame GM’s sclerotic corporate culture for their abject failure to create a complete line of compelling/profitable vehicles. The idea that the United States government will reform GM’s way of being and reverse the curse is completely preposterous. It’s like asking a cocaine dealer to sponsor a crack addict.

Initially, the Chinese walls separating Government Motors’ management from its political masters will prevent excessive tinkering. But there’s no way GM can insulate itself from “undue” political influence. Not when the feds are both the automaker’s controlling stockholder AND its main lender. And certainly not when there are so many GM “stakeholders” ready, willing and able to play political hardball with GM’s new owners.

Why wouldn’t they? The bottom line is that there won’t be a bottom line. The Obama administration may genuinely want to create and then sell off a profitable GM but it’s under no obligation to do so. To wit: there’s no deadline for returning taxpayer’s money. Even if a reasonable turnaround strategy emerges—complete with performance-based reality checks—the new management team is destined to fall afoul of institutional apathy. I mean, we all know how many government-sponsored projects come in on time and/or under budget . . .

Think of it this way: the above list of cars GM needs to keep AND cull to survive presumes that Government Motors’ new overlords will ignore the blowback from closing factories in any given country, state or congressional district. That’s simply not realistic. If the survival of federally-funded weapons programs depend on their sponsors’ political pull as much the systems’ efficacy, why would we expect anything less (or more) from GM’s lineup?

To paraphrase Lowell George, GM’s been down—but not like this before.

By on May 23, 2009

The Detroit News headline: “Obama Auto Bailout Draws Fire.” Suddenly, without warning, Motown’s hometown newspaper has changed sides. What was “their” bailout has become “Obama’s.” The altered allegiance comes hot on the heels Chrysler and GM’s decision to terminate around a thousand dealers apiece. This is not music to the domestic supporters’ ears; the dealer cull represents the complete, final and unavoidable end of Motor City’s domination of the American car industry. The fact that the domestics’ supporters are suddenly behind the franchisee push back—which could scupper both automakers’ future—shows the depth of Detroit’s denial. While the bailout boosters gave The Presidential Task Force on Automobiles (PTFOA) props for shit-canning GM CEO Rick Wagoner, you can file this one under no good deed goes unpunished.

Like any political battle, the latest front in Motown’s wider war against reality is a race against time. Can the axed dealers’ political allies wrest control of GM’s post C-11 future from president Obama’s “smartest guys in the room” before (as?) the company sinks into complete chaos? We’ll see. The DetN reports that Congress critters are firing multiple salvos against US Treasury Secretary Tim Geithner. Reps Kucinich, LaTourette, Conyers, McCotter and others sent Timbo a missive calling for the Obama administration to hand the whole bailout thing “back” to Congress.

To do what, exactly? Other than saving the dealers cast adrift by Chrysler and GM, they got nothing. Which puts the offended politicians at level pegging with the PTFOA. Remember: the PTFOA decided to arrange a shotgun marriage between Chrysler and Fiat, swap the “old” Chrysler’s liabilities for a worthless promissory note (i.e., shares in “new” Chrysler), give the born-again (and again and again) car maker a multi-billion dollar dowry and . . . call it good.

The plan sounded crazy—and it still does. Strangely, despite the dealers’ howls of protest, no one [who votes] seems to care that the feds sold Chrysler down the river. On Friday, Fiat named the three Board of Directors members who will control the new, taxpayer-supported Chrysler LLC. Ignoring the Wagoner problem (Fiat CEO Sergio Marchionne will be both ChryCo’s CEO and a Board member), the announcement was a tacit admission that Chrysler will now be an Italian company. Protectionist outrage? Nowhere to be seen.

This is no small point. As we count down the final hours until GM’s C11, as Congress bellyaches to no practical effect, we can expect history to repeat itself. Former Chrysler exec Jerry York is active again, desperately seeking a chunk of post-C11 GM to call his own. OK, Renault/Nissan’s AND his own. In other words, GM’s C11 could be Chrysler II.

And why not? In Chrysler’s final analysis, all the xenophobic rhetoric about federal tax dollars “saving America’s industrial base” counted for nothing. Not only have the zombies been “allowed” to shutter plants and jettison American production jobs, they’ve been “encouraged” to terminate tens of thousands of dealership-related jobs.

I’m not saying it was the wrong thing to do. I’m simply pointing out that the original logic underpinning the entire $100 billion (and counting) bailout process has disappeared. Which brings two maxims to mind: nature abhors a vacuum and a week is along time in politics.

Will Renault/Nissan fill the hole where the world’s largest automaker used to be? Given that Uncle Sam didn’t get dime one from Fiat for Chrysler, there’s literally nothing to stop them. And if not them, someone. While the feds’ restructuring plan assumes public ownership of the “new” GM, Obama’s army isn’t stupid enough to cling to the ship as it’s sucked beneath the waves. Congress is—which is a scary thought.

Either way, the clock is ticking, and it’s a time bomb. Voters will not put up with this Motown mishegos forever. And the longer this process continues, the worse GM’s chances of even pretending to be in a position to recover. Immediately after The General files, May’s sales figures will emerge. And after that, June. And so on. Anyone who thinks that the GM sales chart’s arrow won’t point straight to hell is seriously deluded.

Delusion is, of course, GM’s strong suit. It suffuses the company’s management. It blights its unions. It envelops its dealers. It infects its pet media. It even afflicts its customers. That’s how General Motors got into this pickle. And that’s how they’re not going to get out.

Unless, that is, Renault/Nissan or some other outside “investor” repeats Fiat’s “pay no attention to this faux Chapter 7” strategy, scarfs up GM’s good bits for bupkis and cleans house. In that case, General Motors might survive. If so, it will be a vastly smaller enterprise.

In fact, any GM that emerges from C11 won’t be GM in any recognizable way. That would be a good thing for some of the automaker’s current stakeholders. But by no means all. Whether it’s warfare or bankruptcy, “surgical” doesn’t mean bloodless.

By on May 20, 2009

I’ve just purchased a Pontiac G8 GT. Sport red metallic with every option. I paid too much (even though it was a below-invoice deal). The car just begged me to buy it. Yep, car guys make the dumbest deals when it comes to their own personal transportation. And I love it. I will drive the wheels off this car, and enjoy every torque-rich moment. But enough about me. Now about Pontiac, and GM. With fewer than eleven days to go before what was once the largest corporation in the world files for bankruptcy, with the Pontiac brand disappearing (what exactly is a “niche” brand anyways?), the G8 GT is a reminder of what could have and should have been. But is it also an indication of what will be? And is that a good thing or a bad thing?

As good as it is, the Pontiac G8 GT highlights GM’s greatest failing: the formerly world’s largest automaker’s unshakable tendency to take the path of least resistance. Remember: the G8 is an Australian import. Originally, this state of affairs was supposed to be a “temporary” fix: a quick way for Pontiac to sell a suitable product in the American marketplace. As with the Belgian Saturn Astra, the G8 was sold internally (and to the UAW) as a “place holder.” After the models succeeded, production would switch to American soil.

Did GM really think that would happen? Who knows? If laziness was GM’s worst sin, self-delusion was its second (followed closely by ADD). Importing cars for a mainstream brand from high cost countries is an inherently risky proposition. (One of the main reasons Toyondaissan builds here.) And sure enough, surprise! GM got nailed on the exchange rate before either car crossed either ocean. More importantly, instead of developing an American Pontiac G8, GM hit [what looked like] the easy button. In so doing, they sowed the seeds of their own destruction. Again.

It’s important to remember that the American automaker has always a deep bench of world-class design and engineering talent. GM also enjoyed complete access to the marketplace. And it had billions to spend on advertising. GM could have fostered strong brands with domestically built, highly competitive profits. But that would have taken genuine commitment from a management team committed to product excellence, rather than the Peter Principle.

How many Pontiac G8’s died because GM’s CEOs and “car czars” sat back and allowed the company’s divisions to expend their energy fighting each other; executives jockeying to generate the quickest, easiest and largest profits, rather than facing their real enemies outside the gates?

GM’s endless internecine warfare led to less competitive products. A growing number of divisions mortgaged their future by offering copy-cat (i.e., badge engineered) vehicles across multiple brands, using aging platforms and retro engines. Why? Why not? And so GM’s products fell behind their Japanese competitors’ reliability, build quality and value for the money.

At some point, GM simply forgot that it was in the car business. It forgot the fact that people buy cars from strong brands that meet or exceed the brand’s underlying promise. How cynical and lazy does a car company have to be to change its brand promise—“Pontiac is car”—rather than build vehicles that deliver the original premise?

In truth, there was nothing wrong with Pontiac’s mantra “We Build Excitement.” There was everything wrong with Pontiac’s products, and, by extension, the corporate culture that provided them. The Pontiac G8 GT is a “true” Pontiac: a poor man’s BMW. Aztek? Montana? Wave? It’s far too late to convince consumers to come back. 

The Pontiac G8 GT I drove home last night gets it right. The Aussie sedan lacks a luxury interior and some “surprise and delight” features (e.g., rain-sense wipers, HID headlamps, and power reclining seats). But it delivers excitement at a price the average working stiff can afford (more so every day). It is a Pontiac. Perhaps even “the” Pontiac; a car that completely surpasses the performance and handling of the parts-bin specials from which the brand was born. The G8 does exactly what a Pontiac’s supposed to do.

That’s the lesson for the New GM. Demote the bean counters to their rightful position as guardians of profit, not destroyers of initiative. Elevate the engineers and designers. Build a limited range of vehicles that fulfill their brand’s promise (although God knows what a Buick is supposed to be). Cut all the models that fail to fit the remit.

If you want to know if the post-C11 GM will make it, that’s where you need to look: at the vehicles GM doesn’t build. In that sense, the Pontiac G8 GT is both a clarion call and a warning. In today’s bloated, highly competitive automotive industry, if GM does the easy thing instead of the right thing, nothing can save them. Nothing.

By on May 3, 2009

“G.M. is very different than Chrysler,” said Rahm Emanuel, President Obama’s chief of staff. “But I suppose the one lesson for G.M., and all the other players, is that this is a moment when a Democratic president said, ‘I am really willing to let a company dissolve, and there’s not going to be an open checkbook.’ There’s got to be real viability.” Huh? I was under the impression that this was the moment when a Democratic president said “I am NOT really willing to let a failed automaker dissolve. Uncle Sam’s checkbook is as open as a hooker’s gams. For the sake of political expediency, there’s got to be pretend viability.” Of course, it’s much worse than that. The White House has caught Detroit disease, where stupid decisions vie with no decisions for supremacy, leaving the status quo bruised and battered, but triumphant. 

Like the Motown moguls that the Presidential Task Force on Autos (PTFOA) protects, all the president’s car guys’ dementia began with an idee fixee. Unlike Chrysler and GM execs, the PTFOA’s starting point had nothing to do with ensuring that they could afford to fly first class to Gleneagles for a round of golf and a hot stone massage for the Mrs. It was a simple question: “How do we save these failed companies (a.k.a. union votes)?”

At that point, the PTFOA developed a massive hardon for federal intervention that’s lasted a lot longer than four hours. Bad craziness was a given.

For example, the bureaucrats running GM’s car business—giving a thumbs-up or thumbs-down on any transaction over $10 million—swear up, down and sideways they don’t want to run a car company. PTFOA boss Steve Rattner has publicly declared that his employer will not “interfere” with GM’s decisions about brands or products. This at the same time that the PTFOA is planning to convert $22.8b of GM’s federal “loans” (so far) into a controlling stake in a newly reconstituted GM. Even The New York Times wonders WTF that’s all about.

Members of Mr. Obama’s auto task force say that even after the government owns a majority of the company, it will have no role in management. That, they say, will be farmed out to professionals, the work supervised by government-appointed members of a new G.M. board.

That doesn’t even make sense. The federal government won’t be involved in GM’s management, but the federally appointed Board of Directors will. And that’s totally different because they’ll be independent, right? Even though they’ll serve at the government’s pleasure. Anyway, I guess we can be thankful that the PTFOA has no desire to farm out GM to amateurs—although God knows I’d put my money on my fellow armchair executives before I’d “invest” a single dime on a GM suit. You know; if I had a choice.

I’m completely confused by the PTFOA’s reluctance to roll up its sleeves and tell GM how to build what for whom, where, what brand to sell it under and how to sell it. I don’t want the feds to run GM. But if they are running it—and they are—how can they do so without getting down to brand and product-related decisions?

Truth be told, the car business is about . . . wait for it . . . cars. If the feds are “protecting the taxpayers’ investment” in GM, they should start by firing all the people who had anything to do with GM’s current brand and product plans—before they make any more. How in the world does anyone expect Fritz “the Wagoner Clone” Henderson to make the correct pre- and post-bankruptcy car-related decisions when the ex-CFO has shown no ability to do so in the past?

By the same token, not firing marketing maven Mark LaNeve is proof positive that the lunatics are still running the asylum. This is the man who ran eight GM brands into the ground, destroying any and all brand equity through a massive miasma of mixed messages. I wouldn’t let LaNeve write a Craigslist ad for my minivan, never mind control a $3 billion ad budget. Why has no one rid GM of this troublesome man?

Again, I’m not in favor of Uncle Sam running GM. Clearly, they don’t have the appetite or the aptitude for the job. But as the Brits say, it’s time for the PTFOA to piss or get off the pot. Either the quango should take full responsibility for GM’s product-related plans (please, God, no) or offload this entire mess on someone else (liquidation or cough-Nissan-cough).

Either way, an immediate palace putsch would be a damn fine idea. Given that the PTFOA has already shit-canned GM’s CEO, there’s no reason to delay a more thorough housecleaning. Every day that the PTFOA allows GM’s current management to chart the automaker’s course makes reversing their lunacy more expensive. And less likely.

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