Monday, April 27, 2009

Deserved To Die

It's actually quite surprising to me how much I've covered General Motors over the years, or maybe as a, stock holder, maybe not.  My favorite is November's Simple Math.  In it, I posited that I could run GM and do no worse than the then-current leadership.  I know it's a simplistic idea, but I still stand by it.

Today GM announced the latest band-aid for the self-inflicted razor slices in their wrists... more layoffs, the ending of Pontiac and the attempt to close a bunch of dealerships.

Layoffs - have to be done.  In a good situation, it would be the necessarey side-effect of a reorg that eliminated lines of business a company was getting out of, the employees the company couldn't or wouldn't find other positions for.  In bad situations, it's the common and often necessary reaction of a company that let itself get bloated in better times. 

Closing dealerships - this is the one I understand the least.  Here's a group of people who want to sell your product.  But now you're not selling that product any more.  So GM's going to have to come up with cash to buy out those that they can and endure lawsuits that stretch on for years and years from those that won't accept a buy-out.  Worse yet, GM could be charged in some states with illegal "restriction of trade" by longer producing certain cars or lines or by lowering the volume of cars it produces. 

The dealer model seems screwy.  I've tried to think how this would work in other industries and I'm getting stuck.  Is it like different Taco Bell franchises?  One can only sell tacos and another nachos?  And at the end of the day they're too close together to let the nachos guy start selling tacos because they're no longer producing nachos?  I guess it would be like a grocery store that sells Post Raisin Bran while the one down the street sells Post Grape Nuts and another Kellogg's Golden Grahams and another General Food's Cheerios.  (I don't know cereal brands, those might not all be right.)  As a child (and high school and college student and newly graduated college student) I dreamt of owning a dealership.  But I would sell all kinds of cars.  I would help people find out what kind of car they were looking for, and then I would show them choices from a number of brands.  It would be this massive place, this massive concrete structure with tiered parking garage so that lots of cars could be shown in natural light, but the rest would be stored under cover.  (I would try to have less inventory on hand and more order-on-demand with free delivery.)  People would drive long distances for the experience.  (Yes, long-distances stink for coming back for maintenance/service.) 

The dealership model always seemed to address a lack of confidence in the cars created.  If your cars were that good, let them sit alongside another manufacturer's.  This is the perfect time to blow away the dealership model in states that will allow it.  Do a deal with Westfield and do mall-parking-lot showrooms, build-to-order, delivery at your home or work (because that's fun!) and hassle-free service (again, pickup and delivery and delivery of a loaner, locate the service where it makes sense or contract out to local repair shops.)

Goodbye, Pontiac.  I've wanted Pontiac dead since they launched the Aztek.  Pontiac was supposed to be the sports car division, but it always got the short end of the stick with uninspiring and unmemorable cars which Chevy kept the Corvette and the Camaro.  Pontiac had the Firebird (right?) and Trans Am but they were either allowed to wither or poorly marketed.  Pontiac had a twin to the Saturn Sky but darned if anyone remembered that uninspiring, poor quality car.  GM had been trying to hold onto the Pontiac brand as a specialty brand but finally caved in and said they will close it.  Really?  What does it take to really keep a brand going?  The dealership network issue notwithstanding, all you need is the brand name itself and a bin full of the metal tags that say "Pontiac" - make it a subbrand of Chevrolet "Find the Pontiac Excitment at your local GM Dealership."

But what of Hummer?  Why keep Cadillac?  Merge it with Buick.  Get rid of Saab.  What of GMC, Open, Vauxhall, Holden, and GM Daewoo?  Or perhaps some of those are already gone and just not covered well in this country?  Or maybe the U.S. Government doesn't care about cars not sold here?

Will GM survive?  Who knows.  If they do, I hope they'll make a commitment to making affordable, quality cars people want.  And to not ever be stupid and arrogant again.
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