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GM's Second Chance
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CNBC Reporter
Now comes the hard part.
After 39 days in bankruptcy, shedding thousands of jobs, closing more plants, and writing off billions in debt, GM is about to exit chapter 11 protection and try to show it can finally thrive. On paper it should succeed. In reality, it still has to prove itself.
Which brings up the question: will the new GM do well outside of bankruptcy?
My gut says GM will get back in the black, but thriving long term remains a question mark.
Short term, GM is now sized to make money with annual sales in the U.S. at 10 million. We should see that pace by the end of the year, and then see it gradually rise from there in coming years. As it does, GM will grow profits. Its market share should hold steady at 18-20%. Free from the excessive debt that crippled it in the past, the company will have the money and energy to invest in future product.
This is the tricky part. While I have no doubt GM can consistently come up with cars and trucks people want- especially under the guidance of design chief Ed Welburn- I wonder if GM can properly market and win over buyers? This is the big challenge facing the new General Motors. For years the company has failed to connect with buyers when it comes to marketing, creating buzz, making the public say, "I gotta have that car."
GM has models that will sell. Look at the new Malibu. Look at the Cadillac CTS. Look at the Chevy trucks. Whether you like them or not, almost all in the auto industry agree that they are winners. So if industry leaders admire these models, why is GM struggling to convince the public to give the Malibu, CTS, and Chevy trucks a try? It's all about changing public perceptions. GM can and must do this if it's second chance is to going to be successful.
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