GM has to sell vehicles in order to improve performance? Duh!
Posted by: in Marketing and AdvertisingFiled under: General Motors (GM), Marketing and advertising
The prestigious 2008 No Kidding! Award For Obviousness in Financial Journalism goes to the Associated Press for this headline: GM’s recovery depends on winning over automobile buyers.
Ya don’t state? And here I was thinking it depended on the Yen carry trade.
But in a way, that headline is a wonderfully succinct illustration of why the odds of a successful turnaround at General Motors (NYSE: GM) are basically zero. The company has a crippling debt load and a cost structure that isn’t even close to being competitive with the infinitely leaner Asian automakers which, by the way, make vehicles that are more relevant.
GM brass are sounding an optimistic note on their upcoming car introductions, and maybe they will improve. But the company has a difficult task: slash costs while restoring the company’s brand positions. Either of those would be difficult, and both at the same time is probably impossible. The company is at a competitive disadvantage that’s simply big, and its decline has gained additional momentum from the decline of its brand equity. If GM didn’t already exist, people would laugh at the idea: “Let’s have a massive debt load and a really high cost structure and sell vehicles that are nearly as good as our foreign competitors.”
When I consider it like that, it’s hard to find a reason to even consider investing in the company’s stock.
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