General Motors (GM) faces significant challenges in North America, including historic losses, plant closures, and intense competition. While GM thrives in many international markets, its North American operations struggle. To revive “The General” and stop the bleeding in North America, the following strategies should be strongly considered.
**Aggressively Restructure Through Strategic Bankruptcy:** GM should consider using strategic bankruptcy to address legacy costs (health and pension benefits) and unfavorable regulatory burdens that its competitors, like Toyota, Honda, Nissan, and Hyundai, don’t face. While GM negotiated its contracts in good faith, the market has shifted dramatically. Bankruptcy would allow GM to renegotiate these terms and level the playing field. This path should be thoughtfully approached due to the hardships it would create for some suppliers and employees.
**Focus on Profitable Models, Outsource Small Car Production:** GM should cease manufacturing small cars in the U.S. and instead import them, leveraging its relationship with Daewoo in South Korea. This allows GM to offer affordable transportation options under the Saturn, Chevrolet, and Pontiac brands without the high production costs associated with domestic manufacturing. U.S. and Canadian factories should focus on building larger, more profitable cars and trucks. The success of the Chevy Aveo (a Daewoo model) demonstrates the viability of this approach, especially as competition from inexpensive Chinese cars increases.
**Optimize and Clarify Brand Divisions:** Rather than eliminating brands (which proved costly with Oldsmobile), GM should refine and strengthen its existing divisions:
1. **Cadillac:** Maintain its position as GM’s luxury leader, producing high-quality, distinctive vehicles to compete with Lexus, Mercedes, BMW, and Infiniti.
2. **Buick:** Position Buick as a “near-luxury” alternative to Cadillac, reintroducing a “halo” model like the Regal to showcase Buick’s youthful appeal.
3. **Pontiac:** Revitalize Pontiac’s performance image, potentially with the return of the Firebird, ensuring it is distinct from the Chevy Camaro.
4. **Chevrolet:** Continue its current strategy, using imports to cover the lower end of the market. Redesign the Impala to compete with the Chrysler 300, Toyota Camry, and Honda Accord. Bring back the Camaro!
5. **Saturn:** Continue aligning Saturn with Opel-inspired designs, emphasizing European flair. The Sky and Aura demonstrate the potential of this approach. Leverage the strong dealer network to compete effectively.
6. **Saab:** Instead of eliminating Saab, allow it to sell upscale versions of Opel models, retaining its emphasis on safety and durability.
7. **GMC:** Focus on passenger trucks and explore developing a more capable small pickup. Redesign the Equinox to better compete with the Ford Escape and Toyota RAV4.
8. **Hummer:** Maintain Hummer’s niche appeal, adding a compact H4 model to compete with the Jeep Wrangler. Despite its image as a gas guzzler, Hummer remains profitable.
While bankruptcy should be a last resort due to its potential impact on suppliers and jobs, decisive action is necessary to prevent GM from becoming a second-rate player in North America. Neglecting the North American market would be a costly mistake.