GM better dead or alive?

Posted on July 26th, 2011 by Rob Marshall

Last weekend, I enjoyed a 1,000-mile trip to the Scottish Highlands, which gave me plenty of time to think about life in general and, unusually General Motors (GM) was a subject that popped into my head and refused to go away.

GM better dead or alive?The reason may be one of pity or even anger. Over the past decade, any sympathy that I might have held for GM’s situation has diminished somewhat, although, I do feel sorry for the working employees, none of whom are responsible for that enormous car producer’s ailments.

Allow me to put a number of its worst traits into perspective. One of Japan’s more prestigious brands was Isuzu. GM owned a controlling 49% stake in the company. Ask any farmer, which 4×4 he would prefer to live with on a regular basis and Isuzu Trooper invariably percolates to the top of his list. Isuzu also produced some fine cars, remember the advanced Piazza Coupe of the late-1980s, complete with its ‘Suspension Engineered by Lotus’ boast?

Now, Isuzu is a very pale shadow of its former self, reduced to making old-model pickups, a host of heavy-duty trucks and buses and diesel engines by their millions. GM effectively destroyed the company as a credible car producer, a factor highlighted by its recent departure from the US market.

GM took large stakes in a variety of other Japanese niche manufacturers too, such as Subaru, or Suzuki, and it owns all of what remained of the failed Daewoo Corporation in South Korea. Its products are now marketed as Chevrolet across Europe, which has succeeded in confusing car buyers even more, as many of them (especially in the UK) think of Chevrolet as the producer of the respected Corvette and of immensely huge American family cars, not wheezing shopping trolleys for elderly commuters.

Neither Suzuki, nor Subaru can claim to have gained much from their relationships with GM. The once highly-respected Subaru was a brand ‘in distress’, GM ensured that its quirky designs and rallying heritage were shelved and replaced by mundane-styled vehicles that GM believed that Americans wanted to buy, while both interior and build quality nosedived. Remember the dreadful and slow-selling Tribeca? GM’s efforts also showed little respect for corporate heritage and identity, by badge-engineering the esteemed Impreza as a Saab 9-2 for some years, which was a disgrace for both brands. Fortunately, Subaru escaped the malaise and is now part-owned by Toyota, where a fruitful partnership is emerging and proves that a positive existence can flourish after a GM divorce.

If only Saab was finding life so easy, after being subjected to twenty-years of being strangled, after the Swedish carmaker was bought in 1990. GM applied its poorly engineered, mass-market platforms to the line-up and started the downward trend for the company. Despite the amazing loyalty of its dealer network and customers, it took 20 years for Saab to be forced to its knees. I remember driving the 9-5 ethanol-powered estate in 2007 and, instead of being amazed at a car that could be driven briskly on 85% alcohol/15% petrol mix, I was shocked by a car of its purported class that boasted a creaking interior and shuddering plastic trim.

Now owned in a questionable deal struck between the Dutch Spyker Cars and GM, Saab is relying on Chinese investment to fund its manufacturing operation, although it has lost the respect of an entire generation of people, around the world. As a current owner of a classic 96 V4, I fear for its very survival, especially as bankruptcy came too close for comfort again last month.

GM’s involvement in a strategic partnership with Italy’s Fiat Group started out fine in 2000 but was dissolved, when Fiat tried, in 2004, to sell its car division to GM under the terms of a four-year ‘put option’. GM’s failure to meet the terms of the deal meant that it was forced to withdraw and pay a $2billion penalty. Perhaps Fiat should be happy that the deal collapsed, considering GM’s ‘achievements’ with other manufacturers outside of the US. Yet, GM obtained the small capacity Fiat diesel engineering that it needed badly for its own needs, although the dependability of those units is questionable and must have cost the company a fortune in warranty claims.

Amazingly, there is a success story. Sort of. Vauxhall Motors, has been owned by GM since 1925. Its products have enjoyed critical acclaim over the decades, although only its appeal to the burgeoning fleet sector in the UK enabled its continued survival in volume terms. Its products were of very poor quality dynamically and, only by courting fleet managers expensively, was its on-going survival guaranteed. For some reason, possibly because the company was tired of being criticised so heavily, Vauxhall (with Opel) has, in recent years, introduced a raft of new models that can compete head-on with Ford’s mainstream efforts, at least in the UK, where it shares top sales honours. The popularity of the Insignia model is, in my opinion, deserved.

Despite this, GM makes no profits in the UK, minimal profits in Germany and scarcely enough money to settle its bills in North America. Just look at what its malaise has done to the car-making heartland in that country, which looks more like a collection of ghost towns than vibrant production centres.

Perhaps I am being a little harsh in my critique of GM but its recent sins are overtaking its past glories. Should GM die? Yes, if its current behaviour continues.