Tuesday, March 15, 2005
How Long Can GM Tread Water?
G.M. might be in better shape than it was when it lost $23 billion in 1992 and was on the brink of bankruptcy, but many analysts say it will be treading water for years to come and extending economic distress across the industrial heartland around the Great Lakes.
Company executives, while acknowledging that G.M. faces serious problems, say they are confident they can weather any storm. "We've been ahead for 73 years in a row," Rick Wagoner, G.M.'s chief executive, said in response to a question at a January news conference about Toyota's looming presence. "I think the betting is we'll be ahead for the next 73 years."
"Is it a birthright?" he added. "Absolutely not. Could we blow it next year? I doubt it. Could we blow it in 10 years? For sure. We could do anything in 10 years."
Mr. Wagoner declined to be interviewed for this article. With the company's stock down about 50 percent on his watch, his legacy is on the line, as is the company's.
So, how bad are things? Well, things would appear to be better than they were a decade or so ago, and things looked just as bad at Chrysler and Ford a short few years ago. But the problem with GM is that we appear to be over the hump with new product introductions, and none of them are showing the same class-leading characteristics as the Chrysler 300C or Ford F-150 and Mustang. Sure, they're good - especially the Cobalt, which is all the more remarkable considering GM's small-car history - but quite honestly, none of them are the sort of gotta-have vehicles that have customers lined up outside the door.
Until GM creates a uniquely-American vehicle, something that'll still have people talking 10 years from now, at an accessable price point (unfortunately, the new Vette Z06 misses that last criteria by about $40K), I don't think they're going to pull out of the current tailspin. Could the Sky and Solstice be it? Perhaps, but without a significant advancement beyond the same theme that the Mazda Miata has carried to consistant-but-not-exceptional sales over the past 15 years, I don't see the new roadsters bringing GM across the finish line. A "baby LS1", perhaps the 4.8 L version of the GenIII with an aluminum block and a relatively aggressive cam, would make all the difference in the world.