GM Stumbles, Sees the (Green) Light

Posted by: Arthur Eves on May 14, 2008

Like most Americans, GM made some bad strategic choices in the last decade or so and has come to regret it. Bob Lutz called hybrids an “interesting curiousity” and went on to pump out big SUVs to help fuel bronco-busting ids and assuage the fears of soccer moms.

GM certainly understood the zeitgeist of the time. Men wanted to feel macho and women wanted to feel safe. The SUVs projected attitude and promised security all while wrapped in all the comfort and luxury you could afford — and by the way we’re not PC so the hell with those pleasure-hating red environmentalists.

So now that there is no joy in Mudville, GM is playing catchup. Fortunately, America loves the home team…and turnarounds…and ‘come to jesus’ moments. So, hopefully, the company that once represented and embodied American industrial might can regain some of its market power. But how could they not see this coming?

Their focus groups kept driving them towards bigger is better--and GM is a market-driven company. While Toyota and Honda kept nibbling at the edges Americans still loved big cars, SUVs, and trucks. No one does BIG better than Detroit and those were the vehicles that sold. No one at GM expected gas to go this high this fast or the falloff in sales to be so steep.

Its not that they don't get the technology. They've had lots of very interesting concepts over the years--cool technology that just couldn't make it to production. From Sunracer in the '80s, to the EV1 of Who Killed the Electric Car? in the'90s, to today's Hywire and Volt concepts, GM's stable of green concepts has always generated buzz but has rarely led to market. If the hot money leaves commodities for alternative energy and oil prices fall, we may go back to business as usual and bozo behemoths may once again dominate the sales charts. Even so, I think a chastened GM has found religion and will bring at least some of these to market as quickly as they can.

The world has changed and no corporation is too big to fail but some do get second chances. Being a great company means seeing beyond the curve...or the next quarter...and making big bets that count. GM seems to at least be making the bets.

Reader Comments

Joe

May 15, 2008 11:37 AM

The problem with Detroit is they have been focused too much on next quarter vs. next decade.

Your comment "Like most Americans, GM made some bad strategic choices in the 90's" is somewhat ridiculous. Based on what?

Everyone makes mistakes, but GM has been building cars for a century. They have well educated MBA's analyzing the market, including projecting the price of gasoline. Management has been asleep at the wheel while Toyota, Nissan, Honda and others have eaten their lunch.

They simply didn't act on the data fast enough. They build better vehicles because they were forced to do so by competition. Time will tell, but their green effort to date has been poorly executed.

The first vehicle they put hybrid technology in was a Chevy Tahoe. Hello?

arthur

May 15, 2008 1:58 PM

Well, the '90s was certainly the wrong date to put on it (I've changed the language since) but I think that GM was making the wrong bets on cars, just as much of America was swept up in the real estate frenzy, and before that the Internet bubble. I think the rationale was similar--this is working for us so let's do more of it. we don't want to miss out and leave money on the table.

There were clearly some big missteps and they're paying the price for it today. So now, like Wal-Mart, GM says that the company has gone green. Only time will tell if that's truly the case.

I still think that we as consumers share part of the blame. GM was giving people what they said they wanted. Yes, their marketing people created a lot of that demand but it wasn't a problem for them until folks stopped buying.

Noz

May 17, 2008 6:21 AM

I expect you are right in terms of the buyers being somewhat to blame for GM's mess. My estimate would just shy of 1%, or less. i am assuming that the buying public is not very bright, and when added to selfish, short-sighted, immature, and easily lead around by their noses... well, there is an ideal set-up for a setup by an industry ready and willing to pounce.

One (whom?--as in 'fair question') should carefully study the role of advertising, that sham business, and then the clowns behind this shameful practice--before banning it. It galls me to have to buy the ads that supposedly dragged me in to buy. One thing is guaranteed, they provided good livings for a lot of otherwise useless 'suits'. Pavlovian.

And so we sink together, this while perhaps arguing over the nation of sourcing of the life-preservers, whether the fabric is 'natural', 'organic' etc. as if it were important.

The Failing Three have been irresponsible, grown very fat, dieted to wraith weight while just now considering taking a bit of the blame.

Anyone got a donut? My pants seem to be slipping and I can no longer locate my belt buckle down there some-where. Eating my way around this is at least better tasting that the other medicines offered--personal responsibility is not a viable option. This and my Hummer II just happens to be out of gaz. SAVE ME, GOD!

Dean

May 19, 2008 12:30 AM

I just got the May 26th issue of BW and on page 26 it says the following: "An 80-mpg version of the Saturn Vue SUV arrives next year. It will be the first plug-in hybrid in the U.S."
Q1. If this is true, why isn't it the cover story and lead of the GM article?
Q2. I googled the 2009 Vue and all online articles talk about the new Vue delivering mpg in the high 20s and 30s. What are the facts?

Gary Kilpatrick

May 21, 2008 10:06 AM

I read the artical in May 26 2008 NewsWeek entitled "GM LIVE OR DIE". To begin with, I've worked for a Japanese automotive company in the past and have spent time in Japan working. One thing that got really got my attention early on was the fact that every high level manager in Japanese automotive companies or any other company that make products of technology are engineers. When these engineers start working for their auotmotive employers out of college, some develop their political savy and management skills and work their way up into managerial positions at some point. Even as managers, they know the product, operations and manufacturing processes like the back of their hands. The BIG problem I see with most any publicly owned American company is that its high level managers are accountants and MBAs. Unless these managers have an engineering degree and have worked as engineers in their past, most don't have the vision to see 5 to 10 years years down the road and make BIG management mistakes leading the company out in the wrong direction. I know that Wall Street drives this wanting these MBAs and bean counters to drive cost down and raise profits at any cost. If the engineers would be put back into high level management positions again and allowed to run their companies like engineers, the American companies would be second to non in technology worldwide and would be lead with boldness and vision.

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BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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