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GM Death Watch 94
Robert Farago
Wednesday, October 4, 2006
So much for Maximum Bob
From www.thetruthaboutcars.com
GMs September sales figures are out. Despite generous Labor Day incentives, zero per cent financing to anyone with a pulse and an easy year-on-year comparison (GM was in the post-Fire Sale mode last September), vehicle sales are down seven percent. Given GMs upcoming production cutbacks, theres only one way sales can go from here: down, taking GMs declining market share with it. Never mind. According to GM Exec Maximum Bob Lutz, "Whatever our market share stabilizes at in the US 22, 23, 24 percent I dont really care. The idea that GM& has got to get back to 30 percent is a wacky notion with all this global competition weve got."
Obviously, Mr. What Me Worry? is a whack job. The fact that the octogenarian ex-Marine has any power whatsoever within GM never mind his multi-million dollar annual salary, huge pension and Gulfstream perks tells you all you need to know about GMs ability to manage itself. At the risk of stating the obvious, shouldnt the guy who calls [at least some of] the shots for the worlds largest automaker understand that the faster GMs domestic market share shrinks, the closer The General gets to the tipping point of no return? Call me a weenie (SIR!), but Id expect an ex-Marine to know when hes fighting a rear-guard action.
By the same token, youd kinda hope that GMs so-called car czar would know that The Generals inability to find new homes for their cash cows is putting his employer in a world of hurt. Pardon me for not being a goldfish, but I distinctly remember Mr. Lutz standing on the running board of a new[ish] Tahoe telling the world that GMs GMT-900s would take the [declining] market by storm and save GMs bacon. Well they havent. Yukon, Tahoe and Suburban sales are soft, and getting softer. Surely the opposite of success is failure, and the logical response to failure is to acknowledge the damage and formulate a new plan rather than obfuscation, prevarication and denial.
Top execs like GM marketing maven Mark LaNeve may be happy spinning the dismal parade of declining numbers claiming that rental fleet sales and limited production are clouding an otherwise bright picture but the numbers dont lie. GM is in a death spiral that no amount of missing Chevrolet Aveos, Cobalts and Malibus can cure. GM claims its GMT900 pickups are the next next big thing, but they simply cant create enough cash flow to sustain The Generals distended, over-extended, lackluster product portfolio.
In fact, Maximum Bob put his finger on the nub of GMs problem: the company has lost its ability to fight import owned competition. GMs September sales results are bad enough, but Toyotas are far worse for GM. The Japanese automakers sales climbed a staggering 25%. And it wasnt just fuel-sipping econoboxes fueling the companys financial combustion chamber. Year-on-year sales were up for the Sequoia (37.7%), Land Cruiser (1.7%), 4Runner (8.9%), Highlander (16.1%), RAV4 (93.4%). Bottom line: Toyotas September SUV sales rose by an average of 54.8%.
The numbers are alarming in extremis. GM's new[ish] GMT900s have not only failed to sell in absolute terms, theyve also failed to stem the growing tide of customers abandoning domestic products for import-owned vehicles on their home turf. As for cars& fuhgeddaboutit. All this global competition has left The General in a corner, fighting Ford and Chrysler for hard core domestic-buying consumers. Short of Ford going belly-up, without products capable of beating-back Toyota, Honda, Hyundai and the rest of the newcomers, the market share stability GMs Car Czar seeks is impossible to imagine.
Meanwhile, reports are filtering in that GM CEO Rabid Rick Wagoner has finally called off the Nissan - Renault alliance talks. This may have a little something to do with new rules enacted yesterday by GMs Board of Bystanders. The language is a bit convoluted, but my take is that they make it easier for the Board to remove pro-Renault investor Kirk Kerkorians man Jerry York, and prevent Captain Kirk from adding new members. So Rabid Ricks covered his ass and told Kirk to take a flying leap. As we predicted, things are getting ugly over at RenCen.
The battle for control of GM is just beginning. Kirk is sure to retaliate against GMs CEO in any way he can, and The Lion of Las Vegas is nothing if not resourceful. Regardless who ends-up the last man grandstanding, the war's already been lost. At an ever increasing rate, GMs products are falling further and further behind the competition in the only arena that makes any difference: the sales charts. While necessary, GM's severe cuts to its production and staff delay the regrouping needed to create the products needed to recapture lost market share. The gotta-have vehicles arent forthcoming, but the reckoning is.
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