GM Leaving Bankruptcy

General Motors is leaving bankruptcy tomorrow after a mere 40 days under Chapter 11 protection. "I'm very much looking forward to the point where we're operating in the clean air and the name of the company not being associated with bankruptcy," GM sales chief Mark LaNeve told the press. It may take a while, and if the company doesn't start making money almost immediately, it won't happen at all.

During the month of June, GM sales fell 36%, a sign that many consumers were unable to finance a car and those that could were uncertain of purchasing a GM make. To right the ship, the company is cutting 6,000 white collar jobs. It has also cut its debt and healthcare obligations by $48 billion and dropped almost 40 percent of the dealers from an unprofitable network. It also has a new deal with the UAW that puts hourly operating costs in the same ball park as its Japanese competitors.

Dropping down to four brands from eight may help keep designers and marketers focused. Mr. LaNeve said, ?We really do want to get focused back on our four divisional brands, Chevy, Cadillac, Buick, GMC, on the great products we have to sell, and really focus on trying to get more customers to try us.? Those four brands make up 16.5% of the US market for cars. GM hopes to boost that to 18.5%. It will need to do that to become profitable.

None of this will help, though, if the company can't produce cars that people can afford and that people want to buy. Changing the logo color from blue to green isn't going to change what people think of when they hear the name GM. Plans for a US-made sub-compact are in the works, but GM needs to get the model to the marketplace.

Simply put, the company needs to perform. It needs to execute a sensible business plan that responds to consumer demand. The fact that GM failed to do this in the past is no reason it can't do so in the future. However, past performance makes one hesitant to believe management's words. And that, in turn, makes one hesitant to buy a GM car.

© Copyright 2009 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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