It Would Have Helped To Have A Little Bit of Sunshine

Rick Wagoner is really wishing for a little sunshine in his life. To be sure, things are better: the product is improving and GM is slashing costs. The torch bearing crowds are no longer congregating outside his office asking for his head. Still everyone is predicting storm clouds on the horizon for 2008. If the market does perform as expected, or worse, then it will be a difficult year for GM. Wagoner is confident that GM can weather the storm and when those rays of sunshine do appear, GM will in a good position to enjoy the fair weather.

Not so fast, says James E. Schrager, clinical professor of entrepreneurship and strategy at the University of Chicago Graduate School of Business. Schrager says that although Wagoner might be a heck of a guy, he has failed to move GM far enough: too much focus on costs and not enough on product.

So, what about the product then? Well, GM's latest batch of vehicles are garnering awards and accolades from the press. There are also improved models coming online in '08 such as the Saturn Astra and the Pontiac G8. I have already covered GM's future product portfolio in great detail, so I won't repeat myself here but I honestly believe that GM will be rolling out a very robust product portfolio over the next few years.

As Bob Lutz says, today's auto business isn't for sissies and there are a lot of challenges. The Toyota juggernaut continues to grow. Toyota has suffered a few quality foibles here and there recently, but the company has such a huge reservoir of goodwill built up that unless there is some sort of catastrophic miscalculation on their part, I don't see how they can be stopped. GM's loyal customers didn't walk away over the last few years, they have been driven away by mediocre product over the past few decades. It's going to take a lot of convincing on GM's part to bring back those buyers and entice a new generation into its showrooms.

One such car that could really turn things around for GM is the Chevrolet Volt. The technology behind that car, if it can be perfected, could be a real game changer for the industry. The problem is, that technology (mainly the batteries) isn't nearly ready for prime time. On a scale of 1 to 10, Lutz gives likelihood that GM can build the car a 9.5, but when it comes to to a 2010 delivery date that confidence dips to 5.5. What's more troubling to me than a slipping launch date is the comment from Lutz that "It probably won't be a flawless launch." However much truth there is to that statement, there is really very little room for error. GM can ill afford an Oldsmobile diesel or Cadillac V8-6-4 fiasco. I mean, there are teething problems and then there are dentures. Hopefully GM and it's partners can find the right chemistry for the battery and debug the massive amounts of software code necessary integrate everything into a seamless system.

sources: ap via chicago tribune, forbes, forbes part 2