Yes, this is just "some guy's blog post", but it's an opinion I thought worth posting since it comes from outside the industry / fandom, and has some merit. -Ming
Forget the balance sheets - save GM with 4 wheel iPods
August 7, 2008 by Richard / ritgrad83
ritgrad83.wordpress.com
Just watched this special program on CNBC titled “Saving General Motors” which puts a positive spin on an otherwise dismal outlook based on recent financial troubles in the US. The program opened with GM looking very upbeat and successful with hot new models from Buick and Chevrolet flying off the dealer lots in an unlikely place - China.
Buick has built and sold more cars in China than in the US and many of them are basically the same as the US models.
The first half of the program focused on GM’s successful strategy to invest in China by building plants and establishing dealer networks long before even the local Chinese automakers were able to establish their brands. This strategy was put in place before Rick Waggoner, GM’s current CEO became the top executive while it was heavily criticized both inside and outside corporate circles. Yet the gamble paid off as China’s economy took off and many ordinary working class residents were able to afford what was once considered a luxury only a few could afford.
It is not clear to me why the program was titled - “Saving General Motors” when it appeared to be doing very well in China and other parts of Asia as well as Europe despite its gloomy outlook in the US with a reported a $13 billion 2nd quarter loss. GM’s balance sheet is still good - over $25 billion after expenses - and the 2nd losses are actually reflection of drastic measures the company is taking to restructure itself in a changing market where other automakers like Toyota, Nissan and Honda have successfully grabbed a larger share.
GM stock eroded from a high of $43.00 per share in 2003 to its current price of $12.74 per share. Many argue that excessively high labor costs and too much focus on trying to sell high mileage trucks and SUVs rather than hybrids or smaller low mileage vehicles are to blame.
GM is is many ways like Apple Computer was before the iPods and iPhone. It has a successful brand name - and it did have good products like the hugely successful Tahoe and Yukon SUVs which have goe through many evolutions - each one much better than the past. Yet those products are no longer hot as gas prices have in some cases exceeded the monthly lease payments.
GM can be saved and its stock value can be reversed if it comes out with hot - I mean really hot and cool products. Not Toyota or Honda-like quality or carbon-neutral-copies of hybrids and methanol/alternate fuel vehicles. GM can build quality like the best of them and it already has with its successful pickups and SUVs. Hybids and alternate fuel vehicles have limited potential as its benefits depend largely on the type of driving the vehicle does mostly (city vs highway).
A cool looking electric car with a battery that can last several hours or at least 100 miles or more between charges with an average highway speed of 70 mph and costs about $25,000 in todays dollars would definitely make people notice. The Toyota Prius is nice - but not attractive enough to boost stock prices. The concept Chevy Volt would classify as hot - with sleek styling and energy efficiency - a rare combination.
Full Blog Post HERE
Also See:
CNBC/ saving GM series premiers Aug 6