GM (NYSE: GM), which decades ago had almost 50% of US car sales, may see its share of the domestic market drop below 20% for the first time since the company was formed. It has relied on big sedans, SUVs, and pick-ups for too long. Now, with higher gas prices and a consumer who has no money, the big car firm has to face the music.
If GM has come to this, one question worth asking is whether its was bad management or bad luck that brought the company so low? According to The Wall Street Journal, "Sales of pickup trucks and big sport-utility vehicles -- Detroit's bread-and-butter products -- have been falling for the past few years."
GM's management did not tackle its labor issues until recently. Before that, the car company was built for success but not tough times. Its UAW contracts assumed that things would go well and that the firm could support a large workforce and generous pension plan. A strategy for bad years was never really in place.
GM's other mistake is that it did not use its very broad product line and large number of brands to create and market more mid-sized cars with good fuel mileage. With dozens of different products, more should have been devoted to buyers who cared about gas and did not want vehicles that get less than 20 miles per gallon.
Bad planning has come back to haunt GM.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.
Google's plan for netbook PCs moves higher into the clouds
Closing Bell: Stock bulls and dollar death (DDRX,GMCR, PEET, SBUX, EBAY, CI, TECD)
So long peak oil, here comes peak uranium
Reader Comments (Page 1 of 1)
6-02-2008 @ 10:10AM
gumbo koontz said...
Lutz is a crock himself...