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Behind The Wheel

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Oct.09

9:23 AM ET

Thursday, 9 Oct 2008

GM's Wagoner Makes Case On YouTube

Posted By:Phil LeBeau

Sectors:Technology | Automobiles and Parts

Companies:General Motors Corp

Rick Wagoner
AP
Rick Wagoner
If you are GM CEO Rick Wagoner, what do you do? The man in the top job at the struggling automaker is pulling every move possible to keep his company from collapsing.

And by all accounts, he's done a hell of a job. Even his critics in the industry have told me Wagoner and his top lieutenants don't get enough credit for the job they're doing in Detroit.

Still, investors keep betting that GM[GM Loading... () ] won't make it. Wednesday, they pushed the stock under $7 a share to lows last seen in 1953. Even more amazing is GM's dwindling market cap. It's $3.9 billion, which is less than GM's market cap back before the crash of 1929. Anyway you look at it, GM's edging closer to really scary territory.

In a practical sense, GM's lower stock has only a few implications. But the larger impact is on the morale of employees and dealers. It's hard to get people to believe in a company's future when investors don't.

Against this backdrop, Wagoner is taking his message of hope for GM to YouTube. In a no nonsense, straight forward clip posted by GM, Wagoner makes the case for GM. I'll admit that when I first called it up, I thought it was an unusual approach, but it's not a bad idea. GM's positives are being drowned out by the cascading effect of a weak auto market, a shrinking cash cushion, and investor skepticism.

So why not put the head guy out where everyone can see and hear him.

Will GM survive this crisis? It's too hard to say. If auto sales continue plunging it will put even more pressure on GM's already strained balance sheet. Remember, these guys predicated their turnaround on the assumption U.S. auto sales would be roughly 14 million. Now some are forecasting sales of 13.5 million.

I've said it before, and will say it again, don't write off GM. Wagoner still has some levers to pull as he tries to keep GM from sinking.

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