GM CEO Muses on Re-invention

[Mar 20, 2009.]

 

In a March 19 interview, with Bloomberg Press, GM's CEO, Rick Wagoner, characterized  the company's plans to drop brands Saturn, Saab and Hummer along with another 47,000 jobs worldwide as the "re-inventing" of General Motors.

Wagoner, who is receiving $1 as his annual salary, appears dedicated to saving the automaker no matter what it takes. As global economies falter, and US families continue to suffer financially, it's time to consider whether "right-sizing" its product line along with its workforce will convince consumers to return to GM dealerships, or if this latest round of cuts amounts to "destroying the village to save it."  Current research suggests  that GM may be on the right track as consumers have lost confidence in buying GM products

US Consumers 'Right-sizing" their Taste in Autos

Downsizing, rightsizing, and downright disappearing. This is what's happening to corporations, jobs, and consumer spending. A recent study by CNW Research indicates that GM and Chrysler sales are suffering as a direct result of customer uncertainty. According to the study, as reported by Reuters, the number of customers who named a GM model as their primary choice dropped by about 13%, while Honda Hyundai, and Kia brands enjoyed increases of approximately 13%, 59%, and 50% respectively.

This trend toward smaller, "greener" cars reflects ongoing consumer anxiety about jobs, and financial security. Although the days of $4 per gallon gasoline may be a fading memory, consumers are increasingly interested in smaller, more fuel efficient cars. If GM can consolidate its product line to accurately reflect consumer preference, and offer pricing commensurate with current economic conditions it may regain  profitability if not its former glory. 

Going Green Key to Automaker Success

Although news of automakers going green can bring wistful memories of muscle cars to many, the Big Three can't take fond memories to the bank. In GM's Fast Lane Blog, Larry Burns, GM Vice President for Research and Development, asserts that the US must lead in developing technologies needed for mass producing  green vehicles. In order to get the attention of potential auto buyers, the US auto industry must once again engage the imagination and enthusiasm of its customers; it's time to replace romantic visions of cruising 1950's era diners in V8 gas guzzlers with the 21st century version of road trips--think of the road trips that could be possible with eco-friendly cars that can travel long distances for pennies. Corporate and product make-overs, coupled with equally innovative auto loans, can put the Big Three back in the driver's seat, right where they belong.

 

About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.