On April 27, 2009, GM proposed a new restructuring plan in an effort to convince the US Government to give the company $11.6B in bailout versus the $5B originally agreed. GM proposed that $10B of this bailout be transferred to stock which would give the Government a 50% holding in the company. There are many other headlines in this plan, including a proposal to the United Auto Works to forgive $10B in healthcare debt in return for a 39% stake in the company. The Government is now in similar talks to save Chrysler.
Now, I am all for supporting the US auto makers, if only for nostalgia reasons to one of the countries foundational industries. However, I believe that this kind of plan simply prolongs the inevitable, which is that both companies are ultimately doomed. Unless they can start to build products that people actually want to buy!!!
In the last several years, I have personally looked at buying a Ford, GM and a Dodge SUV. In each case, I ended up buying an Acura and two Hondas. Why did I turn my back on our countrymen? Well, because as a consumer, I try and make the best purchase I can for the money that I have. Anytime I go to purchase a new car, I do extensive research to the point that it drives my wife crazy, to ensure that we make the most educated decision. The result thus far has been that Honda Corporation had a superior product for the money.
I realize that we are seeing a slump in auto sales worldwide, and in fact, several Japanese makers are also asking their government for assistance. In this case though, GM’s problems go much deeper. In 2007, GM lost the top position, as world’s largest automaker, to Toyota. Since then, they have continued their decline rapidly.
It seems to me that where GM really needs help is not just a longer “lifeline” but rather a new “lifestyle”. The reason Toyota was able to overtake GM was because they understood the customer better and built better products. The bottom line is that they listened to the crowd, and the crowd spoke with its wallet.
As hard as it may be, I think that GM needs some tough love first, before the Government provides any assistance. The company has been carrying floundering brands such as Pontiac and Buick for several years and is just now realizing that it might be time to shed dead weight. Just as the wisdom of the crowd has had its say on GM by not buying its products, GM must now listen to this same wisdom and figure out how to build products that people want to purchase.
Hold on my little GM, help is on the way. TheCrowd is gathering……..
Now, I am all for supporting the US auto makers, if only for nostalgia reasons to one of the countries foundational industries. However, I believe that this kind of plan simply prolongs the inevitable, which is that both companies are ultimately doomed. Unless they can start to build products that people actually want to buy!!!
In the last several years, I have personally looked at buying a Ford, GM and a Dodge SUV. In each case, I ended up buying an Acura and two Hondas. Why did I turn my back on our countrymen? Well, because as a consumer, I try and make the best purchase I can for the money that I have. Anytime I go to purchase a new car, I do extensive research to the point that it drives my wife crazy, to ensure that we make the most educated decision. The result thus far has been that Honda Corporation had a superior product for the money.
I realize that we are seeing a slump in auto sales worldwide, and in fact, several Japanese makers are also asking their government for assistance. In this case though, GM’s problems go much deeper. In 2007, GM lost the top position, as world’s largest automaker, to Toyota. Since then, they have continued their decline rapidly.
It seems to me that where GM really needs help is not just a longer “lifeline” but rather a new “lifestyle”. The reason Toyota was able to overtake GM was because they understood the customer better and built better products. The bottom line is that they listened to the crowd, and the crowd spoke with its wallet.
As hard as it may be, I think that GM needs some tough love first, before the Government provides any assistance. The company has been carrying floundering brands such as Pontiac and Buick for several years and is just now realizing that it might be time to shed dead weight. Just as the wisdom of the crowd has had its say on GM by not buying its products, GM must now listen to this same wisdom and figure out how to build products that people want to purchase.
Hold on my little GM, help is on the way. TheCrowd is gathering……..
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