A giant's visions of grandeur
General Motors just announced that the first quarter of 2005 was its worst in 13 years. This comes as no surprise considering that the bulk of the auto behemoth’s earnings come from the sale of SUVs, a market that has been on the wane for close to a year. Blame rising gas prices as well as growing concerns over the vehicles’ safety, a one-two punch that won’t stop stinging, especially since China’s voracious appetite for oil makes higher oil prices from here to eternity a sure thing.
You can’t blame GM for circling the wagons and insisting that the SUV market will regain momentum, at least publicly. All hopes for profitability depend on sales of the large vehicles. But what’s disturbing is the company’s lack of an attractive range of regular cars that can pick up the slack as models like the Chevrolet Suburban and Cadillac Escalade build up on dealers’ lots. To make mattes worse, GM’s leaders, including new CEO Rick Wagoner, aren’t just mouthing support for their bread and butter SUV lines, they’re putting their money where their mouth is. Wagoner recently announced that he would scale back the development of new cars in favor of accelerating the development of next-generation SUVs, a strategy that seems so obviously doomed to failure that it leaves one asking just what GM’s brass has been smoking.
SUV sales have about as much chance of rebounding as Pope Benedict XVI has of distributing condoms to visitors to the Vatican. Companies like Honda and Toyota, not normally associated with innovation, may turn out to be the wise industrial sages of our time if the current demand for hybrids like the Prius continues to grow. The demand for more fuel efficient vehicles is not to be taken lightly: even Ford has gotten into the game with its new Escape SUV hybrid, albeit with technology bought from Toyota.
GM does have an answer for an energy-scarce future, although its plan seems as unrealistic as its devotion to the SUV. The company has emphasized its intent to develop hydrogen powered cars that will be ready in the middle of the next decade. Never mind the fact that the company will have to simultaneously develop a whole family of technologies to make hydrogen cars reality, or the fact that the production of hydrogen fuel actually uses about as much energy as gasoline does in the first place. This seems to be a desperate effort by GM to leapfrog hybrid technology, where it lags, while trying to convince the world that hydrogen is the real key to the future. Hydrogen may ultimately prove to be much more than fantasy, but GM’s belief that it will someday regain technological leadership in the automotive industry by developing hydrogen is a deception that fools very few people outside of the company’s corporate board room. By the time hydrogen does become reality, GM could very well be long gone.
You can’t blame GM for circling the wagons and insisting that the SUV market will regain momentum, at least publicly. All hopes for profitability depend on sales of the large vehicles. But what’s disturbing is the company’s lack of an attractive range of regular cars that can pick up the slack as models like the Chevrolet Suburban and Cadillac Escalade build up on dealers’ lots. To make mattes worse, GM’s leaders, including new CEO Rick Wagoner, aren’t just mouthing support for their bread and butter SUV lines, they’re putting their money where their mouth is. Wagoner recently announced that he would scale back the development of new cars in favor of accelerating the development of next-generation SUVs, a strategy that seems so obviously doomed to failure that it leaves one asking just what GM’s brass has been smoking.
SUV sales have about as much chance of rebounding as Pope Benedict XVI has of distributing condoms to visitors to the Vatican. Companies like Honda and Toyota, not normally associated with innovation, may turn out to be the wise industrial sages of our time if the current demand for hybrids like the Prius continues to grow. The demand for more fuel efficient vehicles is not to be taken lightly: even Ford has gotten into the game with its new Escape SUV hybrid, albeit with technology bought from Toyota.
GM does have an answer for an energy-scarce future, although its plan seems as unrealistic as its devotion to the SUV. The company has emphasized its intent to develop hydrogen powered cars that will be ready in the middle of the next decade. Never mind the fact that the company will have to simultaneously develop a whole family of technologies to make hydrogen cars reality, or the fact that the production of hydrogen fuel actually uses about as much energy as gasoline does in the first place. This seems to be a desperate effort by GM to leapfrog hybrid technology, where it lags, while trying to convince the world that hydrogen is the real key to the future. Hydrogen may ultimately prove to be much more than fantasy, but GM’s belief that it will someday regain technological leadership in the automotive industry by developing hydrogen is a deception that fools very few people outside of the company’s corporate board room. By the time hydrogen does become reality, GM could very well be long gone.
posted by CatZoo at 12:05 AM
1 Comments:
Another major contributor to GM's decline has been rising health care costs. Right now America spends 14% of GDP on health care, and corporations like GM that offer health benefits pay a big part of that bill.
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