Markethaus Musings

According to Automotive News, Rick Wagoner asked for and received the GM Board's backing in early April. In another article, the WSJ journal indicates that GM needs a "strong leader" to survive its current contretemps. So, the real question, which no one seems to want to ask is, this:

Let's assume Rick Wagoner is the right guy. If he is the right guy, what has changed now that makes him the right guy, vs. the guy who oversaw the largest share decline in recent Automotive History?

Here's how the WSJ sums its up:

GM dealers placed an ad in this newspaper Friday announcing their support of him. But Mr. Wagoner's record after six years at the helm isn't inspiring a lot of confidence among shareholders. GM racked up losses of $10.6 billion in 2005 and last month announced a series of accounting errors that span Mr. Wagoner's tenure as CEO.

On the positive side...for Rick:

• He understands, better than anyone, which numbers need to be fixed. GM has an accounting problem (he's the former CFO)
• He has overseen the implementation of ruinous UAW contracts, predicated on GM market share of over 30% (currently hovering in the mid 20's) and knows better than most, the current players and the land mines in the various contracts
• He doesn't need 90-180 days to get up to speed with what's wrong...at least we hope not
• Even if Rick goes, it would be wise to keep him in office in some capacity because he knows where the land mines are
  

On the negative side...against Rick:

• In football analogy...he took over a Superbowl contender that was making money and selling out the "stadium"...and now they are both out of the playoff hunt and losing money. In the world of Football, he probably would not have made it through the end of this season.
  
• According to most, he's not a car guy. GM's problems are both financial and product. Although he gets credit for trying to bring in a car guy (Lutz) the results have proven inadequate. The product portfolio is very uneven and the continued market share decline is harsh evidence suggesting that better product concepts need to arrive...and fast, to stem market share losses.
  
• The Marketing/Advertising hasn't gotten the job done. After changing the marketing team the first idea out of the blocks was doomed to fail. Employee pricing simply pushed the sales problem into the future...and now we're back to the future. After initial market share gains, the true disaster of employee pricing came to light (as predicted here). Market Share has dropped again. It is obvious that these "pricing" programs do not address the fundamental market share issues. The GM programs appear to only "pull ahead" future sales out of the GM intender pool. An example of this is is "lease pull ahead." This is kind of a typically American disease -- when you run out of credit you don't spend less, you just get another revolving credit card! GM needs to focus on marketing that explains why its products are either superior, or at least as good as or a better value than its competitive set consisting of
  
• primarily Ford and Chrysler/Dodge/Jeep
• secondarily Honda, Toyota, Nissan, Hyundai, Kia, etc.
• GM marketing needs to focus on how to sell its cars more effectively relative to competition. Forget pull ahead "deals."
• Where are the stories of Toyota, Nissan and Honda owners trading in their overpriced cars for the value laden Chevrolets, Pontiacs and Saturns?
• Where are the stories about GM's improved quality?
• Where are the marketing programs that build positive word of mouth?
  

Can Rick Wagoner pull it off? If we use history as a judge, he's going to have to bring game we haven't seen before. Let's hope that the current pressure finally brings some breakthrough, desperation and focus. I think GM's history has been to ride things out, shrink and hide out in a segment where the Japanese don't compete (remember Luxury Cars, SUVs, and now big trucks?). They can't ride this one out. The safe harbor segments are all gone now. I truly wish him and his team best of luck...Detroit needs some good news out of GM.