January 26, 2006How exactly does one lose $8.6bn?
Filed Under: Ugly Stuff
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...and if anyone finds it, could they give me a call? General Motors posted a $8.6 billion loss for 2005, amid North American weakness and big charges tied to restructuring and Delphi. The report came a day after Bush suggested in an interview that Ford and GM make "a product that's relevant" instead of contemplating a bailout.
Here's the fuzzy math, which btw, should probably include the full $2bn they threw down the toilet in advertising. PS note the source: the company (hmmmm):
Survey question: Bush thinks GM should make a product this relevant. If you were GM, would you make:
a) a car
b) a car that looks pretty
c) a car that looks pretty and doesn't guzzle gas
d) an iPod
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Comments
Survey Answers, by process of elimination:
GM Should make fewer cars (both volume and makes) and that doesn't guzzle gas. I'm not sure about GM's ability to make a car that looks pretty. I guess the Saab's are nice, and a friend of mine likes the Pontiac GTO...
Unfortunately, short of dramatic restructuring, GM's got serious problems. The largest one, IMHO is that the Unions are so strong that they simply cannot do the dramatic restructuring they need.
They've made improvements, dropped Oldsmobile, done good things with the Pontiac brand, had a fairly decent revival for Cadillac - but, for example, but they've made some serious bombs:
1.) Saab. Wasn't there a time in the heyday of SUVs that Toyota was a buyout possibility? Instead GM bought Saab? Now I love Saabs, I've got 2 of them. But they just aren't a good fit for GM. They had to know that they'd just bring Saab down, rather than increasing their value. Isn't that why you buy a company, to increase the value of that product?
2.) Not predicting the market movements. Make more SUVs, please! Seriously, even the new Pontiac roadster is about, what, 15 years too late to catch in on the roadster craze? Same with Hummer...
If I were GM, I'd do the following:
1.) See what car companies I could divest. Saturn, Saab, Chevy, no sacred cows. Why on earth do you need eight different brands? Pontiac and Cadillac would seem to be the brands with which GM could sell high right now.
2.) After divesting, reduce the number of models. Look at the Japanese and Germans. Audi has, essentially, 3 car platforms:
Jetta/A4
Passat/A6
Phateon/A8
That's it. Honda/Acura and Lexus/Toyota operate under similar principles.
Granted, I have no clue about their labor/materials costs, plant efficiency, et. al. but from a branding standpoint, GM has always been an enigma to me. They seem to be in love with the brand diversity that was relevant to the Bob Hope Generation (my 90 year old Grandmother still thinks of Buick as a luxury badge), and totally missing the boat with Gen X (I actually had to drive a Pontiac Vibe once, bleh) and the aging Boomers.
Posted by: Alex Hutton
