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It was once said that what was good for General Motors
The company, along with Ford
While Toyota itself has had to reverse its U.S. course with plans to cut truck production and begin producing its hard-to-get Prius hybrids in our country, it nevertheless has been a major part of the increasingly competitive current against which GM must swim. In fact, the Japanese company cruised past its Detroit-based rival in the first half of this year, selling 4.8 million vehicles worldwide to GM's 4.5 million.
It takes money to lose money
Then there's General Motors' less-than-dainty cost structure. It was clearly trying to deal with that albatross earlier this month, when it announced a host of measures -- including the lopping-off of salaried heads -- in its all-out run for survival. Another key issue on the bloated-costs front is GM's ability to impose benefit cuts on blue-collar employees, thousands of whom are members of the United Auto Workers. As recently as September, 73,000 GM workers represented by the UAW walked off their jobs. While the strike was short-lived, it sent a clear signal that, healthy GM or not, the company's cost-cutting efforts will be no picnic.
There may be other structural difficulties at the company as well, many of which appear to be going unattended for now. For instance, amid GM's new approach to cutting spending and raising capital, some observers would have liked the company to announce that at least one of its current, fading brands was headed for the scrap heap. By simplifying the company, management would enhance its likelihood of survival.
Pokey progress
But its sluggish effort to crank out really fuel-efficient autos could easily prove to be General Motors' biggest bugaboo. Just last week, the company said it would deliver hydrogen-powered fuel cell vehicles to a pair of postal stations for mail delivery. That follows an initial delivery of GM HydroGen3 fuel cell vehicles to a Virginia post office in 2004. According to the company, the programs helped GM learn about how fuel-cell vehicles operate under certain conditions.
Meanwhile, GM is distributing more than 100 fuel cell vehicles to "real customers to help Chevy and GM understand what it will take to bring larger numbers ... to customers around the world." Terrific, but this overly deliberate approach is the biggest reason why drivers are looking elsewhere for fuel efficiency. Think about GM, and I'll wager you conjure up an image of gargantuan SUVs. That image has to change, and fast.
So at least for a while, GM should muddle along, turning out Suburbans, attempting to deal with its expanding multitude of difficulties, but likely still missing the mark. In the meantime, Fools will be well advised to put their hard-earned investment shekels elsewhere. General Motors is an accident waiting to happen.
General Motors has been knocked to bottom-of-the-barrel single-star status by Motley Fool CAPS players. Would you use a different gear?
