Ford and General Motors are working to change that, to be sure, but it’s tough sledding. For GM, March sales come on the heels of big trouble with Delphi, its major supplier, and a former family member that spun off in 1999. Delphi has asked a federal judge to cancel its union contracts, and has released a recovery plan that would close or sell 21 of 29 plants in the U.S. The United Auto Workers responded in kind, and a crippling strike – for GM, Delphi and workers -- looms.
It is the ultimate in high stakes saber rattling. According to Automotive News, a walk-out by Delphi workers could cost GM in the neighborhood of $1 billion a week: every North American GM car carries on it an average of $2,000 worth of Delphi parts. GM, of course, isn’t about to let a strike like that happen and their solution, apparently, is to sell. Sell like a homeowner who can’t make the mortgage payment, sell everything that’s not bolted down, sell business assets to save the business in order to build a recovery war chest that will partially subsidize Delphi worker salaries – thus avoiding that strike. In fact, the sale of GMAC for $14 billion came right after the Delphi news, and was preceded by sales of GM’s stake in Fuji Heavy Industries (owners of Subaru), Suzuki and GMAC Commercial Holding. Up next will probably be their stake in Isuzu Motors, and who knows after that – maybe Chevy’s bowtie?
When it’s all over – aside from the government accounting investigations that continue – the reality is that GM will be a smaller car company, hopefully selling better cars. That’s essential: No matter how much money GM raises by selling off Granny’s china, it won’t launch a true recovery unless it puts some of that money into building the kinds of cars people want to buy. Otherwise, if the $40 billion GM has in the bank and the billions of dollars they’ll get from selling stuff is used to pay off union workers and close plants, the General Motors may as well get used to being an afterthought in the North American car market.
The good news is that GM looks to be on the way with good new suvs, and an upcoming crossover platform on which they will build new eight-passenger vehicles, starting with the upcoming Saturn OUTLOOK. The bad news, or the same old news, is that GM seems to be missing the point, outlined ever so clearly by a recent batch of negative spots during The Apprentice’s Make Your Own Tahoe Commercial Contest. All slammed the Tahoe for being environmentally irresponsible. That’s cute -- especially considering that it’s become easy to be environmentally responsible, thanks to rising fuel prices. There are plenty of pocketbook environmentalists out there, to be sure. But there’s also a message: attitudes about the cars we drive are changing, and car companies that sell the same old smokin’ SUVs, and don’t sell a competitively priced and prepared sedan and compact car that gets great gas mileage and low emissions -- they may well be doomed to market insignificance.