General Motors is
in a cash crisis that has come to a head in the current credit market crisis.
As a company, GM is a child of the late 19th Century industrial era. It comes from a time when success was determined by size, and it got big. Very big. GM itself is essentially a modest sized economy in its own right.
So...when it runs into difficulties, the US economy
is affected. Quite literally, what's good for GM is good for the economy. But, the sheer size of the company has enabled it to become complacent, with a 'weather the storm' attitude. It's been losing money on its automotive operations in North America since 2004.
Think about that - it's been losing money on its core business for four years - that's almost half a decade. Why? Because their offerings have been disappointing at best, and generally give the impression of being shoddily assembled. Except for the Cadillac brand which has been steadily catching up to its competitors, the mainstay of GM's offerings - Chevrolet and Pontiac - have been steadily sliding when compared to Toyota, Honda and even Nissan and Mazda.
The biggest mistake? Little or no meaningful product differentiation. Not only are the cars built on common platforms, the overall dimensions, shape and features are nearly identical. The similarities between a Chevy Cobalt, a Pontiac G5 and a Saturn Ion (mercifully extinct now) are basically nil. They look more or less similar; the features differ minimally, and they all drive about the same. The difference - a bit of trim and a few badges.
GM is a dinosaur. Big, unwieldy and unmaneuverable. Their "product optimization" efforts have hamstrung their offerings badly, and the obvious duplication across product lines is painful. I actually liked Saturn for being different from the rest of GM's line - their vehicles looked different, drove differently and so on - when they rolled out the Ion a few years ago, they essentially killed off the uniqueness of the brand - creating "yet another Chevrolet". (Bringing the Opel Astra over under the Saturn badge was a brilliant move - they need more of those kind of changes to happen)
The current credit market is essentially an extinction event for big, monolithic industry companies like GM. They need to make their various brand divisions independent again - able to move on their own, and with their own unique identity - more than just a marketing brand and a bit of custom shaped plastics. Only when the monolith allows itself to become a collection of more autonomous, smaller companies will it stand a chance of succeeding in today's climate.
