The Finch Formerly Known As Gold

22 November 2005

The mark of excrement

Matt Rosenberg says nothing will change at General Motors:

I've been a Honda guy ever since I grew up. Reliability is what matters. And so I don't expect that GM's big job cuts, announced today, will make a whit of difference. They'll still be out there peddling third-rate product to the public, with the sycophantic hacks of the American auto press still pimping for them, just like always. The main concern at GM will remain the care and feeding of the union and union pensioners, and moving enough product to get some numbers that investors and analysts like. But not making good motor vehicles.

General Motors, if you look at the balance sheet, isn't a car company: it's a finance company (GMAC) that vends motor vehicles on the side. Which is why talk earlier this year that GM might actually spin off GMAC, one of its few divisions that ever turns a profit, was viewed as suicidal; they did eventually sell off three-fifths of their commercial-mortgage operation, then unloaded $55 billion worth of car loans onto Bank of America, perhaps to raise cash during these troubled times.

My own prescription, and if anyone actually follows it, I will be surprised:

  • Sell Saab. It was a lousy deal to begin with, and the result is some very unSaablike vehicles for the sake of economies of scale. People buy Saabs because they're supposed to be unique, even goddamn weird; Saabs are not supposed to be like Subarus (9-2X) and Chevys (9-3) and most especially Chevy trucks (9-7X).

  • Cut back to 2.5 divisions: Chevrolet and Cadillac, with Hummer on the side as a niche product. Buick, Pontiac, GMC, Saturn — all expendable, all way past their shelf date. (Jack up the Solstice's price by $5000 and give it to Cadillac.)

  • And now that you don't have to make three or four copies of the same damn car anymore, you can afford to make one version, and make it excellent.

Then again, there's always Chapter 11.

Posted at 7:24 PM to Driver's Seat

TrackBack: 10:24 PM, 22 November 2005
» GM Job Cuts Won't Improve Poor Quality from
I'm proud to be American. I'm pro-business, although opposed to federal tax code giveaways to big corporations and whole industries. I'm Republican, but not very keen on all the state tax breaks allowed by Rs and Ds for business in......[read more]

TrackBack: 5:22 AM, 23 November 2005
» Cuts won't solve GM's fundamental problems from The Subjective Scribe
GM's problems are self-made. Some put the blame squarely on the unions and their demands in past years. Although in the distant past, unions might have overdemanded at times, in recent years the unions have been doing a lot of conceding to help keep ......[read more]

No, no, no. GM's a health care company that sells vehicles on the side.

Posted by: Ray at 9:29 PM on 22 November 2005

The original reason for divisional overlap, if memory serves, was that GM's founder, Alfred Sloan, didn't think the company had enough external competition to keep its workers sharp and its products up to snuff. I wonder what their excuse is now?

Posted by: Francis W. Porretto at 3:22 AM on 23 November 2005

And of course Sloan was anxious to fill any conceivable gap between price points: Chevrolet was the bottom of the ladder, Pontiac one rung up, Buick and Olds split the next level, and Cadillac was on top.

This doesn't much explain why in the 1920s GM came up with "companion makes" for the top four. (Pontiac was originally the "companion" for Oakland; when the experiment was halted in the 1930s for the obvious reasons, Pontiac, which was selling better, was kept on and Oakland was dumped. LaSalle, Cadillac's cousin, managed to survive through 1940, and gee, it ran great.)

Posted by: CGHill at 7:13 AM on 23 November 2005

WIRED once suggested that auto companies would one day give away the cars and sell services. That may never be practical, but things do seem to be moving in that direction.

Posted by: Mister Snitch! at 11:32 PM on 24 November 2005