Thursday, September 3, 2009

Dreams don't always come true. If you are GM, they never do.

It is always a letdown when your dreams don’t come true. For instance, I wanted to be a fighter pilot. GM has a dream as well. GM believes it can claw back market share and return to a position of being one of the great world carmakers. Just as I am not writing this article from a cockpit, the dream of GM is just as likely to be frustrated.

Why is GM’s dream impossible? It’s the product, or in GM’s case, not a huge amount of new, exciting product. While GMC, Buick and Cadillac, the three non-Chevrolet brands remaining in the “New GM” have been clearly profitable, many potential buyers have been turned off from GM products as of late, and commercials which exhort the consumer to “take a look at me now” are probably not going to drastically improve sales figures. Chevrolet, which itself is supposed to be the major seller and ostensibly profit-maker for GM, has virtually no future product lined up other than the Volt. If the Volt fails, GM will probably go down in flames; if it succeeds, then it is back to business as usual with Chevrolet – only one car carries the fortunes of the firm and the rest are mediocre at best.

A good example of GM’s inability to strike gold is the Chevy Malibu. According to sources, GM will be unveiling a new Malibu very soon. The Malibu was the car that was supposed to have clawed back a major chunk of the midsize car market, and has so far failed in that mission. It is certainly GM’s hope that a new Malibu might succeed, but if it’s the badge on the hood that is hurting sales, no amount of gorgeous sheet metal will make up for it – just ask Alfa Romeo.

I don’t think I can be optimistic about the Cruze, either. The Ford Fiesta will be the first to show what American carmakers will do when bringing European products to America. It has been a reasonable seller in Europe, but that does not mean it will succeed in America, where consumers will not be willing to pay European prices—that is, several thousand dollars more—for these cars. Trying to lower the price to make it attractive to the American market may require GM to remove the more appealing features of the European model, such as the interior.

Potential buyers have been completely turned off of GM brands as of late; and in the area of small cars, where people are expecting GM to compete and even profit, GM has neither the history, know-how, nor drive to build small cars that will be what the public and the government both want. It all sounds like GM will have to make compromises in its quest for competitiveness, but this will likely come at the consumer’s expense.

I’m actually glad that GM has the dream it does. It gives me hope that GM will at least try hard to achieve its goals, and so even if it falls short, it will try to build the best cars it can. But as to which of these dreams is most likely to come true? I’m fairly confident that I’ll be writing a road test (sky test?) of an F-22 for you before GM is able to make the turnaround it hopes it can.

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