Marketing Strategy

What’s good for General Motors is good for the country. Er. The other way round.

Charles Wilson, Official DoD Photo
Charles Wilson, Official DoD Photo

Charlie Wilson, president of General Motors, is alleged to have said during his confirmation hearings as Eisenhower’s secretary of defense in 1952: “what’s good for General Motors is good for the country.” On the day after General Motors declared bankruptcy, it seems to be a good time to reassess Charlie’s statement. Is a GM in bankruptcy good for the country?

General Motors arguably peaked in the years after Charlie’s leadership. Transitioning from years of supporting the country during war and peaking on a demand of newly suburbanized citizens driving out to the new suburbs on new roads (that too courtesy of Eisenhower), GM could do no wrong. But by the 1970s, it was clear that expensive gas was here to stay and that big cars could no longer survive. Or was it actually not so clear about the future of big cars? GM experienced a revival in the mid 90s by selling big trucks and then in the 2000s by being at the forefront of the SUV craze. Boom, then bust again, as this interactive graphic from the WSJ shows the most recent decline of GM sales.

GM’s now in bankruptcy. Is that where the country is heading? It turns out that Charlie actually said in his confirmation hearings, as quoted in a 1961 Time Magazine article, was “[f]or years I thought that what was good for our country was good for General Motors, and vice versa.” If we take Charlie at his word, then this week’s bankruptcy promises an end to the binge of car buying on credit and overbuilding based on a capacity that no longer exists. The “Old GM” will take the brands and liabilities the company no longer wants, while the “New GM” will try to become a more nimble company producing cars with the body styles Americans know and love (SUVs, Trucks, Medium-Large sedans) and the powertrains that won’t starve their wallets. That’s not going to be an easy trick to pull off.

If the outcome of the “Old GM” and the “New GM” is to create a car company that builds cars Americans actually want to buy, it will be good for the country, and vice-versa. It will be even better if that company becomes an independent entity again and not just a drag on taxpayers. I hope that GM uses this opportunity to go for broke; the company doesn’t have much to lose, and so much to gain in terms of brand equity, sales, and customer loyalty. GM’s competitors aren’t going away.  They will use this opportunity to gain market share and to redouble their efforts to succeed.  Let’s hope too that the challenge of innovating with less will transform what we know about the american car business and turn it into something wholly new (that people want to buy).  That would be a story and an inspiration for the citizens and government of the United States as we seek to rebuild our brand equity and world standing.

(a Footnote of sorts: Fast Company wonders what will happen to the Volt?  I think the only certain thing is that no one knows yet.)

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