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Source: chevorlet.com 2008 Chevy Malibu |
Which brings up the most frequently asked question I get from readers and viewers: can GM successfully shift gears from trucks to cars?
The good news: GM's [GM
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] designers, engineers, and execs have the will and ability to roll out winning cars. Look at the new Chevy Malibu, Cadillac CTS, Saturn Aura, or recent Pontiac offerings. They are every bit as good as the competition. On top of that, the cars in GM's pipeline including the Chevy Camaro should do well.
In addition, the rapid loss of market share has rattled the tree at GM. The leaders know there's no time to waste. The good news is GM is a much more nimble company and, when pressed, can move quickly to meet a challenge. This is not the mid 70's when GM was caught flat footed by the oil crisis and couldn't quickly adapt.
The bad news: shifting GM's production from trucks to cars will take time and be costly. Ask almost anyone in the auto industry and they'll tell you the domestic automakers simply do not have enough flexibility in their plants. In other words, GM can't just flip a switch and crank out fewer trucks in exchange for more cars. It will take many months to re-tool plants.
It will also be costly. The UAW will work with GM, but the union will also fight to keep jobs and get buyouts for those GM wants to release. Now, GM has plenty of liquidity at the moment, but there is a limit. GM has already sold and borrowed against many of it's major assets and the credit markets stink right now, meaning the company will find it more expensive if it needs to borrow more in the future to fund this restructuring.
My outlook: GM can get through this crisis, but it won't be pretty. Its market share could fall much further, running the risk of dropping behind Toyota [TM
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]to become #2 in the U.S.
That is what will make this summer so challenging for the company and its fans. GM is ending its first 100 years with a test that few could have imagined when the company was dominating the U.S. 40 or 50 years ago.
Questions? Comments?







