As General Motors Goes So Goes The Country

The old saying goes As GM goes, so goes the Country. So what does that mean, considering GM just emerged from bankruptcy protection as a smaller, leaner company? Under the bankruptcy protection, the labor contracts with the UAW and CAW were restructured. As a result, manufacturing costs to produce domestic vehicles at UAW plants are dead-on competitive with the manufacturing costs to produce foreign vehicles at non-unionized plants here in the US. In exchange, the Unions got a percentage of the new company, so now they have a vested interest in the future success of the company. Thats a good thing. As GM goes, so goes the Country. GM has downsized and many people have lost the jobs, as have many people across the country. Now that bankruptcy is over, job losses will continue to slow, as they are continuing to slow in the overall economy. In order for GM and the economy to recover, we need growth. Not growth generated by loose and faulty business practices, but sustainable growth based upon continued tangible improvements to product and service that will stimulate consumers to spend. The US Auto Industry will recover in 18 to 36 months, and when it does so, sales will go from an estimated volume of 10 million units in 2009, up to approximately 14 million units, due to pent-up demand, and then settle around 12.5 million units. So there are anywhere from a 2.5 to 4 million units increase on its way. Is GM prepared to go head-to-head with its competitors for market-share that it once had? Not really. It has some good products, but they have given up a lot in the bankruptcy. So how does GM grow effectively to meet demand and compete for market share? It already has most of what it needs. Chevrolet is designed to compete against Toyota, and Buick is being re-branded to compete against Lexus. The problem is that neither Chevrolet or Buick had Toyota or Lexus sales volumes prior to the bankruptcy, so they will sell fewer vehicles and loose market share in the short-term. GM needs to fill the gap. Built of the same hardware and architecture as Chevrolet and Buick, is a complete line of cars in Europe, GMs German brand, Opel. The Opel brand (including Vauxhall), is currently up for sale, and considered part of bad GM. Opel is anything but bad. The current winning proposal by Magna International and Sberbank, would leave GM with a 35% stake. A recent bid from Beijing Automotive of $921 million for a 51% stakes in Opel, would leave GM with a 49% stake. The long-term viability of Opel would be best served by GM retention of a majority interest over Beijing Automotive. For that bid to work need a minor stake, somewhere around 5% would need to be given to German Auto Unions. $921 Million. If GM wishes to get rid of bad assets, they should consider selling its stakes in the flailing Suzuki and Isuzu brands Having a decidedly Germanic feel that would be well received by fans of other German brands such Audi, VW, and Mercedes, the product is exactly what US consumers will want. You owe it to yourself to go to their website www. Opel.com, and take a look at their models. Each and everyone is a looker, and they also have a full line of clean diesel powertrains that provide 30% better fuel efficiency than the gasoline counterparts, all while being clean, green, and efficient. And each and every model could easily be built alongside Chevrolet and Buick platform-mates. And they would surely gain some marketshare.


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About the Author:
Gregg Fistetto is an Auto Industry Consultant based out of Long Beach, California