Viewpoint August 13, 2009, 3:03PM EST

GM: Still Making the Same Mistakes

Has GM learned nothing? The "introduction" of the Chevy Volt this week shows the company has no idea how car sales really work

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It was almost painful to watch new General Motors CEO Fritz Henderson's live Webcam meeting this past Tuesday. On top of the company's recent problems—a growing negative perception by the American public and years of financial losses, culminating in bankruptcy—it is sadly obvious that no one now in charge at GM understands how car sales really work. What GM desperately needs is for satisfied impulse buyers to become evangelists for its products, or the company will never get close to reliving its glory days.

That statement is not a slight against the many superior products GM has introduced in recent years or the products it plans to bring to the market in the near future. It's just that these guys so clearly know nothing about how to improve GM's perception problem—and this is the "new" team?

There's a fundamental rule of a successful business: "underpromise and overdeliver." That concept has been around since the Studebaker Brothers were building wagons for the Civil War. After the war ended, they codified their business ethic in Studebaker's motto: "Always give a little more than you promise." Nothing better sums up GM's wrongheaded thinking than its execs' promise that the company will return to technological superiority once they finally bring the new Chevrolet Volt to market.

GM's Self-Smearing Image

First GM mounted a PR campaign proclaiming that its top priority is to alter how the public thinks of GM and its technological prowess. That's a dangerous position to take, particularly since GM has bragged that its new electric car, the Chevy Volt, would be able to travel 40 miles before the onboard generator kicks in to take over the propulsion and therefore the Volt will be rated around 230 miles to the gallon.

Now why would GM give the public the Volt's maximum range? That's only going to set the public up for disappointment, because some buyers, through their own driving habits, will likely not get that promised 40 miles before the generator kicks in. They'll complain about it, too. GM should have said that the Volt will get a minimum of 30 miles on the battery pack, which would still be the industry's best. That way, people who got more mileage than that would brag to all of their friends—and anyone who stopped them on the street to ask about the Volt—that they were "getting far better than the 30 miles promised." And that would spread positive news about GM's accomplishment. Instead, GM has once again set itself up to have the audience participation go the opposite direction.

No one really knows how the Volt will respond to real-world driving. Bob Lutz told me 18 months ago that GM was having to design all new radio systems, air conditioning, power steering pump, wipers, and so on for the Volt, because in an electric car these systems are all powered directly by the battery.

Additionally, lead-footed drivers will end up draining its battery quickly. I'm reminded of the eight-hour lithium ion battery in my Macintosh laptop. If you turn it on and let it sit idle, eight hours isn't much of a problem. But if you actually use the computer, that battery drains at twice the claimed rate.

Second, execs originally voiced their belief publicly that this electric-hybrid vehicle could possibly be brought to market with a window sticker price around $30,000. Now it's $40,000 and climbing. This, too, made GM's best and brightest look as if they don't know how to price and manufacture their vehicles. And third, the angular, high-tech design that graced the Volt they hauled around to auto shows—which did strongly engage the public's attention—is not going to be the Volt's final exterior design. So GM has misfired on all three points, meaning it's made three promises that it can't keep.