What A Car Wreck!

Lordy Lord! GM's share price at a six decade low! No matter how bad you think it is going to get for the US auto industry, it just gets worse. GM’s announcement of a 45% drop in car sales for October is mind-boggling. Some might argue that the Toyota sales decline of 23% is even more astonishing given that the Japanese behemoth has apparently been able to walk on water over the past twenty years. (Their success of course had nothing to do with walking on water – Toyota implemented the shocking concept of making good products which consumers wanted.)

Can GM survive? Can Chrysler survive? Can Ford survive? I don’t know but Chrysler seems to be the one that is in the most precarious position. I find it astonishing that the current triumvirate at Chrysler – Nardelli, Press and LaSorda are still (correctly) decrying product quality. Chairman Nardelli and President Press can not really be blamed for the Chrysler quality reputation and performance given their relatively short period in the job, but the company’s quality performance is just amazingly bad. In its most recent survey on car reliability, the 2008 Consumer Reports survey suggests that almost two-thirds of Chrysler brands are rated below average. How can this happen after so many years of saying “we must improve our quality”?

It is not too surprising that the government is baulking at providing additional support for a GM/Chrysler merger. Politically, Obama will not be able to leave GM fail because of the job fallout, but the concern must be that it is throwing good money after bad. Many commentators have made the unions the whipping boys for the problems of the US auto manufacturers. While they can shoulder a lot of the blame, they were not responsible for (lack of) product development, design, supply chain, consumer understanding and much more. Not so long - early 1980s' - GM's US market share was hovering at 50%. Today, it is less than half that! How can so many high paid, intellectually bright people get it wrong for so long?

Once I've figured out how we all got suckered into this sub-prime fiasco, I'll let you know. Don't hold your breath though!