Even Under a Cloud, G.M. Is Predicting Sunshine

I wonder if Mikey or 80 wrote GM's Magical Recovery Plan?
Even Under a Cloud, G.M. Is Predicting Sunshine http://www.nytimes.com/2009/06/03/business/economy/03leonhardt.html?_r=1&hpw
General Motors has been hemorrhaging customers for decades. For the last 30 years, it has been losing almost one percentage point of market share every year. It sold 45 percent of the new vehicles in this country in 1980, 35 percent in 1990, 28 percent in 2000 and 19 percent so far this year.
Imagine, then, that someone asked you to make a conservative forecast of G.M.’s market share five years from now. What would you say? G.M. executives were asked to do precisely this, while putting together a restructuring plan to persuade the White House to save the company from collapse.
Their answer was 19 percent.
That’s right: with their company headed toward bankruptcy court, their work force being cut by 21,000 jobs and their decisions now subject to Washington’s approval, G.M. executives predicted that the company would suddenly become better at holding on to its customers.
This small triumph of hope over experience — and the fact that the Obama administration still approved the restructuring plan — gets right to the biggest reason to worry about the G.M. bailout. The White House had no good option other than to rescue G.M. But if the bailout is going to succeed at creating a smaller, healthy G.M., its executives and their new government overseers need to be realistic about the company’s problems.
They can’t just insist that it has turned a corner — the Cadillac CTS was the 2008 Motor Trend Car of the Year! — and that the American public will eventually be smart enough to realize this.
The bailout will, in fact, solve several of G.M.’s biggest problems. Workers have accepted painful cuts to their retirement benefits. Bondholders have forgiven debts. Orwellian work rules that sapped productivity and creativity have been removed. The Obama administration is preparing to remake the board.
All these steps should help the company focus on building cars that enough people want to buy. But G.M. still hasn’t explained how, at long last, it will manage to do so. And optimism doesn’t qualify as a strategy.
It would be easier to believe that G.M. had reached a turning point if we hadn’t heard the same claim so many times before.
“Detroit Fights Back,” Forbes reported in 1977. “G.M. Moves Into a New Era,” Business Week announced in 1984. “G.M.’s $11 Billion Turnaround,” Fortune said in 1994. Just last year, the magazine printed a photograph of Rick Wagoner, then G.M.’s chief executive, next to the headline “Gentlemen, Start Your Turnaround.”
The business press has at least injected notes of skepticism at times, but G.M. executives generally have not. They’ve been an irony-free version of those old Brooklyn Dodger fans, constantly saying, “wait till next year.”
But next year has never arrived, because G.M. cars haven’t been as good as their rivals. If you’ve ever experienced the joy of being told that your rental car is a Toyota Corolla rather than a Chevrolet Impala, you know this. The data bears this out, too. Surveys of customers by Consumer Reports show that G.M. cars break down more often than Japanese cars.
The ultimate judgment, of course, comes from the market. As Susan Helper, an economist at Case Western Reserve University, points out, Detroit’s cars are consistently priced $2,000 to $3,000 below their Japanese equivalents, yet have continued to lose market share.
Most worrisome, many car buyers in their 20s and 30s don’t even consider buying an American car. These younger buyers are effectively replacing loyal Chevrolet, Ford and Chrysler customers in their 60s and 70s, the auto analyst John Wolkonowicz notes. Which is why Detroit’s market share just keeps falling.
Mr. Wolkonowicz and his colleagues at IHS Global Insight, a research firm, dug into the bankruptcy filing this week and came up with their own projections. They forecast G.M.’s market share would drop to 17 percent in 2014. (Going out one decimal place, G.M. did forecast a small drop, to 18.5 percent in 2014, from more than 19 percent now.) Global Insight also thinks that total industry sales will recover more slowly than G.M. does.
The resulting difference is significant. Global Insight expects G.M. to sell 20 percent fewer cars than the company expects, both this year and next year.
Yet here, surprisingly enough, is where we get to some real reasons for optimism. Even under this less rosy forecast, G.M. may still make a small profit next year. By 2014, it is likely to be quite profitable, according to Global Insight. The Obama administration’s internal forecast is even more conservative, and the company would still start making money within a couple of years.
Why? The cuts that the administration forced on the company are big enough to give it some wiggle room. One in three workers will be gone. So will the Hummer, Pontiac, Saab and Saturn brands.
And these cuts have the potential to do more than just reduce costs. They will make it easier for the company to focus on its remaining brands. It will become a little more like Honda and little less like its old self.
Its executives refer to this as the “fewer, better” approach, and the shining example is the Chevrolet Malibu. Back in 1980, the Malibu was the king of sedans. By 2007, though, G.M. sold only 33 Malibus for every 100 Accords that Honda sold, according to Autodata. Then came a redesign that made the Malibu sleeker and more comfortable. This year, for every 100 Accords sold, 59 Malibus have sold.
Some skeptics doubt that these green shoots will amount to much. They say that G.M. is a fundamentally broken company, one that will continue its drift toward irrelevance. And they may be right.
But now that the government owns most of the company, it may as well try to make it viable.
Clearly, that does not mean micromanagement — like, to take one relevant example, directing G.M. to make fuel-efficient cars even if customers don’t want to buy them. It also doesn’t mean letting G.M.’s executives operate with a free hand.
To judge from their latest rose-colored predictions, those executives still don’t quite get it. Most of their cars are not yet reliable nor appealing enough. That — not car buyers who are too slow to know a good thing when they see one — remains the biggest problem.
On Monday, after G.M. filed for bankruptcy, Fritz Henderson, its chief executive, held a news conference in New York. “Today,” he said, “marks the beginning of what will be a new company, a new G.M., dedicated to building the very best cars and trucks.”
It sounded like the kind of thing you might have read in one of those upbeat magazine articles from 1979 or 1989 or 1999. Yet those of us who make up G.M.’s brand new group of majority owners — taxpayers — have to hope that Mr. Henderson is right.
We also have to hope the Obama administration will force him and his colleagues to be realistic.
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Civis Romanus Sum

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Nope. What I did write is GM won't fail, and will emerge stronger then ever, and take back it's title as the best auto maker in the world. GM isn't going anywhere Jimmy Boy. Everything you and your butt-buddy "Canuck" have done on this Newsgroup has been for absolutely nothing. You changed no one's mind, influenced no one, and made complete Trollish Asses of yourselves. Congratulations, should you ever reproduce (unlikely, I know), your children will remember you fondly as that old prick sitting in front of a computer monitor, hours on end, scratching up any anti-GM news he can find. Hell, even if you started a single petition in the real world (which, I understand, frightens you greatly), you would have done more with that simple piece of paper, then you have on this group in over 2 years. Congrats Jimmy Boy, you and your buddy "Canuck" are truly worthless idiots. Oh, and by the way, there are some good stories on CNN's website today, so be sure to copy and paste all of them for us. Perhaps it makes your days go by quicker. Have a pleasant day.
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If you feel that way, I am sure when GM trades again on the market you will get a chance to put your money where your mouth is.
Me, I might put a naked short on it at some point.
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Me, I estimate less than 10%.
If they are still around. They are one congress, senate or president away from being annialated. Just because the current jack ass will not, one can expect this corruption and debt-spend situation to be in the next election tickets.
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