Why GM Deserves to Fail

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Thread: Why GM Deserves to Fail

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    6.2 Liter LS9 Supercharged V8 Premium Member ChevyRules's Avatar
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    Why GM Deserves to Fail

    Why GM Deserves to Fail
    A ChevyRules editorial
    February 27, 2009
    www.gminsidenews.com



    GM deserves to fail period. This company has been mismanaged since the beginning and it is sure not going to be fixed anytime soon. From when Billy Durant ran the company into the ground TWICE, to the 1980ís with cost cutting and rebadging galore, to 2009 with CAFE and the economy looming down their throats. GM has shown us they cannot get themselves out of dire situations without panicking and knee-jerk reactions.

    Letís start from the beginning. General Motors started back in 1908 when Billy Durant was buying all of these automakers. The man was a genius when it came to forming a company, but had no idea how to run it. This caused the banks to take over GM in 1910 for 5 years trying to right the ship before their investment went to hell. Mr. Durant again showed his genius when he ran Chevrolet and took back GM by buying up GM shares. When new vehicles sales collapsed again, he was unable to manage a strategy that would return the company to stable grounds and he was ousted again and Alfred Sloan took over.

    Under Sloanís control General Motors was able to claim the title of worldís largest automaker in 1931, which is a great achievement considering it was in the middle of the Great Depression. Under Sloanís control I will argue this is the only time GM was able to deal with a crisis when it rose to power. GM continued to grow and grow until it reached their highest marketshare of 55% in the 1950ís. GM was booming. Basking in the 50ís and 60ís glory of the muscle car era. They were even able to stave off the first Japanese invasion due to no one wanting small cars and the quality was sub-par at the time. Then came the first energy crisis of the 70ís and the second invasion of the Japanese automakers. At the time GM had nothing in their product portfolio to deal with the American sudden change of taste in vehicles. Fortunately, the Japanese did by offering small and fuel efficient vehicles. After the oil embargo was lifted, the US government formed the EPA and set a mandate of that the companies vehicles must average 25 MPG as we enter the ďgloriousĒ 1980ís.

    First letís review what is the structure of GMís brands. Chevy was the entry level brand, Pontiac the performance brand, GMC truck division, Oldsmobile being entry luxury, Buick being mid-luxury, and Cadillac being top luxury. Each division filled a niche and had hope that the customers would slowly work up to Cadillac as they kept on making more money. This was great as each division didnít invade their particular niche and were relatively separate with everyone developing their own components and little sharing.

    So now we see GM going into panic mode and making knee jerk reactions with the Japanese invasion and the 25 MPG mandate. They integrate all the brands into one entity pretty much. Losing their independence in order to cut costs. They started sharing engines, platforms, etc. Then came rebadging where they would take a Chevy vehicle and rebadge it across the line with minimal changes. The most famous vehicle is the Cadillac Cimarron which was a rebadged Cavalier with very minimal changes. They also went Front Wheel Drive happy due to their more efficient packaging and fuel savings. Cadillac taking the brunt of this sudden change. They also even considered and completed prototypes of front wheel drive Camaroís. Then there was the lame attempt of Displacement on Demand or Active Fuel Management as it is called today. Officially, dubbed the 8-6-4 engine which ran on 8, 6, or 4 cylinders as required. A great idea, but lacked the computing power to make it work reliably as it does today. GM probably realized this, but were desperate to do anything to keep customers happy. Then there was the cost cutting gone wrong with the Oldsmobile diesel. Taking a gasoline engine block and converting it to run on diesel which burns at a higher compression rate. This caused the engine block to break eventually and became a reliability nightmare. The Oldís diesel also ran dirty as hell which killed the image of diesel engines which contributes to todays lack of diesel penetration into the U.S. market. We can thank Saturn for killing the FWD Camaro, but it also started another unnecessary brand. There was no reason why General Motorís could not have made the small cars into Chevy and force their dealers to fix themselves or risk their franchise. But, what done was done and Saturn was created.

    Enter the 1990ís and the baby Saturn brand. Probably shocking the industry, Saturn had a warm reception to the American youth. The brand paid for itself after 4 years when the first car hit the market, their customer base was extremely loyal, customer service was top notch and changed the industry with the polymer panels. Who was probably the most shocked about Saturnís success was big bad Chevrolet. They groaned and moaned to the higher ups as they were probably worried that Saturn could potentially unseat them as GMís volume brand. And they got their wish too. Saturn was starved of product and sales crashed as product grew stale. Saturn was never able to recover from the crisis again. But, hey chin up. GM was booming in general. Marketshare was recovering and they were raking in the profits. GM has the surge in SUV and truck sales to thank for that. Wait a second here, GM relying on a class of product, where does that sound familiar? Oh that is right, back in the 60ís and 70ís right before the fuel crisis hit when they relied on fuel guzzling muscle cars. GM was setting themselves up again for another crisis in the future for not paying attention to the rest of their lineup.

    Cue 2005 and gas prices soaring past $3 a gallon and even approaching $4 in some areas. SUV and truck sales plummeted and GMís profits went down for the ride as well. Posting a staggering loss in 2005 which prompted doom articles being posted up all over the Internet in 2006. GM entered restructuring mode stat. But, wait a second! They based most of the plan off of the profits of their new GMT-900 based trucks and SUVís! Gas prices still looming in the $2 range and sales becoming stagnant in the segment if not dropping still. They also refused to enter into the hybrid market, but for PR sake, made the joke of a hybrid; the Silverado hybrid. Things did look up for GM in 2007 as they just renegotiated their UAW contracts and signs of the turnaround plan working started showing up. Also great news for enthusiasts, a huge array of RWD vehicles were planned including the return of the Camaro! The Impala, G6, DTS, Lucerne and possibly more products were all planned to go RWD! This would also make Pontiac into the performance brand it once was! BOOM! Congress now requiring a 35 MPG mandate by 2020. We enter the 1980ís again. GM panics and cancels EVERYTHING RWD except for the Camaro and DTS/Lucerne replacements. But, the DT7 didnít remain for much longer either. That was killed too which of course brought the Lucerne replacement down with it. Now in 2009 we have GM on the brink of bankruptcy. Only remaining alive due to federal loans. Which then they go further into 1980 hysteria and now killing Cadillacís revitalized image. We have the wonderful FWD Theta-Epsilon based SRX, Alpha is on hold, Escalade going to Lambda, and now an Epsilon II based DT7 is rumored to be green lighted any day now!

    As highlighted in the previous paragraphs, GM has been unable to cope with any kind of crisis. Seeing how the government is too scared to require a total management change, if GM ever recovers from this situation there will be no guarantee GM will fix the mistakes that caused them to be in this situation and will not learn from the past. These events also has proven that GM is a reactive company that has the ability to gather intelligence on future market changes worse then the CIAís ability to gather security intelligence. It will be better for all of us to have GM fail and have the viable divisions to be spun off in hope they can develop the product necessary for them to survive. This will save us money in the future when a crisis arises again and GM canít cope with it and needs more federal money to keep them afloat when they refuse to be a proactive company.

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    7.0 Liter LS7 V8 stevecmh's Avatar
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    Re: Why GM Deserves to Fail

    agree.. GM has had some astronomical problems over the years.. most that probably would not have happened in other companies.. with that being said. i believe GM will succeed.. GM is almost like a drug addict... they have to get soo close to extinction to realize their problems and to change them... i know its an odd analogy but I think you understand where I am going. I really think that GM is being forced to make many good changes that just might be enough to save them... at least i Hope

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    Re: Why GM Deserves to Fail

    Hubris, more so than poor product planning, or quality issues, will be GM's undoing.

    In theory at least, allowing a giant like GM to fail would send a brutal, but crucial, message to every nook and cranny of American business: keep fit or die.

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    Re: Why GM Deserves to Fail

    Good read Chevy BUT I still don't see why GM deserves to fail. I see clearly how its current (and some previous) management teams deserve public scorn and how the current BoD actions (or rather lack of them) may constitute serious illegal wrong doings as they have violated in every possible way the fidiuciary duty to look after the interests of the shareholders. They should have stopped Wagoner and his band of useless and incompetent managers, including Lutz.

    GM, its people, its legacy, its loyalists AND America deserve GM to go on. that is the way I see it.

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    6.2 Liter LS3 V8 bmwboy2007's Avatar
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    Re: Why GM Deserves to Fail

    Now might be the time for the Federal Government to create an automotive directorate. This new Federal agency would take over management of GM, Ford, and Chrysler, with a priority on maintaining union jobs and manufacturing plant proliferation. With government subsidies, this could be a great jobs program for America, and our national transportation industry could be saved.

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    Re: Why GM Deserves to Fail

    A post-bankruptcy Chevrolet-Buick-Cadillac was appealing to me. But seeing what they're doing to Cadillac, I'd rather that division be put out of its misery. If GM wants to chase Lexus with FWD mid-market, sub-par vehicles...then they can do that very well with Buick.

    I fear it's really over for GM. The management deserves it. They took a company so many admired and supported and just completely raped it to death. I feel badly for the Americans and Canadians whose income relies on this corporation, I feel badly for General Motors the entity and the legacy--which doesn't deserve this outcome, but it's time for GM to go away. It's terribly sad, but it is time.

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    GMI Contributor Premium Member Ming's Avatar
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    Re: Why GM Deserves to Fail


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    Re: Why GM Deserves to Fail

    Quote Originally Posted by Simon says View Post
    Good read Chevy BUT I still don't see why GM deserves to fail. I see clearly how its current (and some previous) management teams deserve public scorn and how the current BoD actions (or rather lack of them) may constitute serious illegal wrong doings as they have violated in every possible way the fidiuciary duty to look after the interests of the shareholders. They should have stopped Wagoner and his band of useless and incompetent managers, including Lutz.

    GM, its people, its legacy, its loyalists AND America deserve GM to go on. that is the way I see it.
    They should fail because they don't learn from these situations. They have relied on one segment of vehicles and neglecting the others TWICE now. Without a change in management, they will repeat the situation and have the same reactions again. GM currently isn't fit and is full of old dinosaurs. They deserve to go under.

    I don't think they should as they still play a vital part in our country's economy and with our economy in the state it is in now, we won't be able to take the hit of GM failing. But, I do certainly think they do deserve to fail from refusing to learn from the past.

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    R2-D2 Astromech Droid mgescuro's Avatar
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    Re: Why GM Deserves to Fail

    Quote Originally Posted by t-rex View Post
    Hubris, more so than poor product planning, or quality issues, will be GM's undoing.

    In theory at least, allowing a giant like GM to fail would send a brutal, but crucial, message to every nook and cranny of American business: keep fit or die.
    It's pretty much going to be a little bit of everything.

    This is one HBS Case STudy I'd purchase, just for the opportunity to read... "How Not to Run a Multi-National Conglomerate."


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    Re: Why GM Deserves to Fail

    I guess you wouldn't have much to if GM fails...what else would you devote your time to bashing? Seriously, why do I come here? This is a GM website and you're saying they deserve to fail...with friends like you...

    We all know there have been plenty of mistakes...snooze.
    If all of the parts for Hondas and Toyotas are made in the US, then why did they have shortages after the tsunami in Japan?

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    6.2 Liter LS3 V8 bmwboy2007's Avatar
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    Re: Why GM Deserves to Fail


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    Firebird Concept (the turbine one) wescoent's Avatar
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    Re: Why GM Deserves to Fail

    Quote Originally Posted by mgescuro View Post
    It's pretty much going to be a little bit of everything.

    This is one HBS Case STudy I'd purchase, just for the opportunity to read... "How Not to Run a Multi-National Conglomerate."

    There already is a Wharton case study on it, but I cannot for the life of me find it.

    In about a year, I'm going to starting writing one on GM, and one on Ford.
    "They say Eve tempted Adam with an apple, but man I ain't goin' for that. I know it was her pink Cadillac!"

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    Re: Why GM Deserves to Fail

    Then there was the cost cutting gone wrong with the Oldsmobile diesel. Taking a gasoline engine block and converting it to run on diesel which burns at a higher compression rate. This caused the engine block to break eventually and became a reliability nightmare. The Old’s diesel also ran dirty as hell which killed the image of diesel engines which contributes to todays lack of diesel penetration into the U.S. market.
    Not to nitpick, but do you really believe the Olds diesel is solely responsible for the image of diesel engines in America? It was craptastic to be sure, but I think semis, and Mercedes had more to do with the death of diesel than GM.

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    Re: Why GM Deserves to Fail

    Quote Originally Posted by bmwboy2007 View Post
    Now might be the time for the Federal Government to create an automotive directorate. This new Federal agency would take over management of GM, Ford, and Chrysler, with a priority on maintaining union jobs and manufacturing plant proliferation. With government subsidies, this could be a great jobs program for America, and our national transportation industry could be saved.
    Keep Ford out of it . . . you commie

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    Re: Why GM Deserves to Fail

    Quote Originally Posted by bmwboy2007 View Post
    Now might be the time for the Federal Government to create an automotive directorate. This new Federal agency would take over management of GM, Ford, and Chrysler, with a priority on maintaining union jobs and manufacturing plant proliferation. With government subsidies, this could be a great jobs program for America, and our national transportation industry could be saved.
    Why have you included FORD, they haven't gone to the Welfare Office? BTW, what great job has the government ever been responsible for?

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