Friday, April 27, 2007

A New #1

For the first time in 76 years, General Motors (GM) did not lead the world in auto and truck sales for a quarter. The honor went to Toyota. This is significant. There has never been a company in the world like GM. Even as recently as 10 years ago, this seemed almost inconceivable. GM was that big. GM had that much clout.

There's a myriad of reasons for this. As in anything in life, staying at the top is about the hardest thing there is to do. This behemoth company had decaying factories, couldn't keep up with the fast pace of technology, was too slow to adjust to current trends, used typical American short-term planning, had no global strategy, and couldn't keep up with quality standards of it's foreign competition. It's amazing that GM was perched where they were for as long as they were.

It was also recently revealed that due to being tied to the UAW, GM is paying pensions to hundreds of thousands of ex-employees. Approximately $3000 of every GM car sold goes just into paying these pensions. Chrysler and Ford are in similar boats but the rest of the auto world is not. Toyota, Nissan, Mercedes, and BMW are building cars and trucks in the Southern United States to avoid the unions. The big three aren't able to do this.

Don't shed tears for GM, though. They should have seen this coming years ago. Instead, they maintained a state of corporate denial until a few years ago. Believe it or not, GM seems to be coming back. Many of their latest offerings have been top or near the top rated by the auto magazines. Cadillac, suddenly has become one of the most desirable brands around. It's hip and trendy to own a Cadillac again after years of being perceived as stodgy boats for people over 70. The Corvette is now considered to be a world-class performance car, as good, if not better than many Porsches. Saturn is grabbing attention with its very good Aura. GM may be on the way to being a top brand again. It's hard to be that optimistic about Ford and Chrysler. Ford has had a decent showing this year sales-wise, but they have a long way to go to be profitable again. Chrysler, with no help from it's parent company Daimler, is only worth around $5 billion. 10 years ago, it was worth $39 billion.

As for Toyota, it's not as rosy as it would seem. Quality problems, particularly in the transmissions, have been reported lately. Most of these problems have been in the latest version of the Camry sedan, which is their bread and butter.

1 comment:

Erik said...

I'd love to say I'm suprised but I'm not.