GM plans car for under $4000
That word comes from the GM source of ultimate credibility: Rick Wagoner, the boss. According to Wagoner, who was interviewed by Auto Motor und Sport, a German magazine, for a forthcoming issue, General Motors is ’ holding some competitive low-cost architectures worldwide.” Wagoner also noted that GM currently has in production a car that sells for about $4000.
This would not be a vehicle intended for sale in the United States, but it does show that GM is making every effort to be competitive in world-wide automobile markets. Though China has been getting a lot of publicity as the most rapidly growing auto market in the world – currently accounting for about half as many new car sales as the United States, but expected to exceed U.S. sales within ten years – the next automotive frontier is likely to be Africa and South America. Tata, the Indian automaker who is bidding for Jaguar, is on the verge of producing a car for sale in those markets at slightly more than $3000.
Wagoner also said that the American auto market is significantly weaker than had been expected and that GM would be responding by cutting the number of individual models produced. ’The times are over when Buick and Pontiac each had ten models in their portfolio,” according to Wagoner.
But there remains the one big question:
Is Wagoner the right man to be running GM at this point? He’s been a top GM executive since 1992, became its president in 1998 and chairman of the board in 2003. That position took him out of managerial control, but he reassumed personal management of GM’s North American operations in 2005.
Wagoner has had ample time and opportunity to make the moves necessary to lean down GM’s domestic operations, even without having an opportunity to make changes in the union contract. Wagoner is personally responsible for having put so many of GM’s eggs in its light truck basket and for delaying the introduction of new Zeta platform vehicles. If Pontiac and Buick, the only two GM divisions that don’t sell trucks, currently have too many models, that’s Wagoner’s fault, too.
But, despite his executive position as the boss of North American operations, Wagoner’s real focus is elsewhere: China, India, and other emerging markets. Wagoner sees these markets as GM’s future, one that is unfettered by the mistakes made by management in the past and by domestic production costs. He seems fundamentally uninterested in GM’s position in the largest automotive market, the United States.
If that’s his focus, though, he seems to be a step behind. While it is good that GM intends to produce a car that sells for less than $4000 in emerging markets, by the time GM gets it into production other carmakers will already have established their presence in those markets. Chery, the Chinese automaker, is already doing so. Tata is not far behind, anticipating production of the car pictured above next at a price slightly more than $3000. Other Chinese and Indian automakers are doing the same.
Wagoner, who came into GM through its finance office and rose to the presidency from the position of chief financial officer, is not a salesman and has no background in manufacturing. Under Wagoner, GM’s decision-making often seems defensive, not aggressive. For example, GM poured billions of dollars into design of the current models of light trucks and truck-based SUVs to protect its truck market, but did little to become competitive in the passenger car market. The upcoming Malibu, while generally conceded to be a well-designed and appointed car, follows a styling pattern established by Volkswagen and Audi ten years ago and seems, in the end, best defined by the word “competent.” That recipe did not succeed for the Ford 500/Tarus, and it’s not likely to be a winner for GM, either. It is, however, the product of a corporate culture that is risk-averse, rather than encouraging the imaginative.
It is hard to say whether Wagoner has created that culture or was himself a product of that culture. It is certain, however, that the culture cannot be eliminated until there is a change in the company’s top management.