Monday, March 30, 2009

A Long Time Coming, and Not Coming Back

Donald Pittenger at 2Blowhards remembers the happier times at General Motors.

So let's go back 60 years to 1949. The Japanese car industry hardly existed. European manufacturers had never attained large production volumes in the inter-war period and had yet to reach breakout status (that would happen in the 50s). Around half the U.S automobile market belonged to General Motors and competing companies watched GM's engineering, product packaging and styling carefully, taking care to be different, but not much different from the General.

As I commented there, GM's serious long-term trouble started with the failure to respond adequately to the big changes of the 1970s (oil crises, emissions standards). They then failed to adjust their scale to the reduced market share that resulted when people who had been burned by their various inferior products moved to the fast-improving Japanese cars.

Since then they have acted like those people are just deluded and will see the error of their ways when GM comes out with it's Next Big Thing, thus restoring GM to that position Donald remembers. They have never seemed to recognize that even if their cars are on par now, customers aren't coming back without a reason, and Toyota, etc. aren't likely to give them one. Worse, those customers' children are now in the market, and they only associate GM with the bad experiences of their parents.

GM has been trying to be a 50%-share company with 30% or less of a much more competitive market. This wasn't sustainable in good times; the recent slump merely accelerated the reckoning. Perhaps the looming bankruptcy will result in a leaner GM more in keeping with market reality. But it took GM 40 years to get to this point, so no one should expect a quick turnaround. Whatever the outcome, it will never be the same.