God bless GM...

The era of procrastination, of half measures, of soothing and baffling expedients, of delays is coming to its close. In its place we are entering a period of consequences.
…Winston Churchill

It may not be said in Automotive industry context, but it completely suits today’s scenario of Auto market.

So it is now pretty evident that now GM will follow the footsteps of its younger brother Chrysler. June 1st seems to be the date when the king of Automobile will come in the court to file chapter 11 bankruptcy and will try to protect its remaining reputation in the global market.
Last quarter result seemed to be the final nail in its coffin, when GM had reported net loss of $6 billion (Loss of $9.66 per share), though it was less than expected as per Reuters, who has estimated loss of $11.05 per share. I could only manage to stop my laugh after reading those line “less than expected” even after posting $6 b loss. May be they wanted more from the former world no1. But this time honor goes to new world champion Toyota after posting quarter loss of $6.9 billion with annual loss of $8.9 billion. Now the lean company Toyota president Mr Watanabe must be feeling the heat after reporting consecutive bad report cards. OK, I am not going to comment over Toyota.

Showing consistency in negative growth GM has reported significant drop in its market share. Only hope came from GM Asia Pacific reason where in spite of overall market sell was down GM was able to post some single digit growth rate. Thanks to China and India where GM is reporting positive growth rate. Buick is trying to makeup of GM loss, which has reported around 60% growth in China. India also is trying to give it share in GM growth by giving positive result in the highly competitive and crowded small car segment with Chevy Spark. Captiva is also proving to be right choice but it deals in a highly low volume market segment in India. So, after this quarter result now GM CEO Mr Fritz Henderson is now accepting that bankruptcy is now the most feasible option. Well, I don’t see whether they have any other option.

This week only I was attending All Employee Meeting with Ron Yuile, Executive Director and CEO GMPT-AP, Where he was addressing curious GM India employee and was trying to answer the question. Not surprisingly the talk of bankruptcy was in the core of talk. Well, he has said that now GM bankruptcy is almost inevitable and we might be filling for chapter 11 on 1st June, deadline given by Obama government. What I could not understand him saying that in August GM will be out of bankruptcy and New lean mean GM will take off from there. I wish the same. But will it be possible? If you have such a futuristic vision, how could you let this situation come? I know filling for bankruptcy is your choice but at the same time coming out of it is not yours and its not so easy. You have to make tougher and quick decision then and after seeing the past report of GM decision taking capacity, it doesn’t give a bright hope. But yes, Current CEO Mr Henderson seems a bit quick and clear while taking decision. Here GM has started relying on the positive starting of Chrysler bankruptcy and hoping that Chrysler will come out of it within two months. Hence to go for a quick bankruptcy should be a good and feasible way for GM too. Sounds good. But is it for real?

Chrysler major operation stays in North America and Fiat alone was capable of taking control of the troubled automaker not to mention at a fire sell price. Even after all these now it seems tough for Chrysler to come out of chapter11 in 2 months, as per Reuters analysts it may take up to 2 years. Now here is GM, Operating almost all over world. I am not going to discuss about GM-AP and GM-LAAM operation as their financial results are not as bad if not good. But North America and Europe operations really needs a complete face lift. Where GM NA is facing the burden of seven big brands (Chevrolet, Cadillac, Buick, Pontiac, Buick, Saturn, Hummer), Europe also is in a deep mesh. Now its pretty clear that GM will be almost done with Europe market and drastically reduced in its home market too after either selling or phasing out its legendry brands. I really feel sorry about Pontiac, one of my favorite car with more than eighty years of glorious history and models (GTO, Bonneville, Sunfire,G6, Grand Prix, Grand Am, Solstice, etc)behind him.

After Saab, now its other strong unit Opel is under the hammer. Fiat, Magna and many others are waiting to grasp this golden opportunity to take control over this brand. Recently launched Opel Insignia is doing pretty well but now its late for GM to keep maker of Roadster. They have to say now bye (buy) Opel.Since last June GM is trying to sell its Hummer brand which is just proving as keeping and feeding an elephant in recent years. But even after one year GM is unable to close a good deal for its iconic brand. Now it’s clear that it may not get the desired price for this Off-road 4X4 monster. Same way Saturn is also not in the good book of GM. So here is the situation, Once after acquiring several brands to create a global common name GM, which has kept all the brands under one umbrella for almost a century now they are removing them one by one.

With four brands Chevy, Cadillac, GMC and Buick, GM will be a relatively small company but will it become a lean and profitable organization…lets see. With reduced brands and reduced market share GM will not reclaim the top spot in the Auto industry in near future. But I wish at least it mark its presence in the future, as it was my dream to work in GM after visiting Renaissance Center.

In case (most likely) GM files for bankruptcy, end of Detroit reign will almost come to an end. As only ford out of Big3 will remain out of court but again even Ford is now much smaller than its glorious days and now struggling to get rid of its quarterly report in red ink.Coming Back to GM now it’s a critical time or can say last chance to survive. Whatever mistakes you have done in your golden time will always hunt you back in your turmoil period. Its like there is no escape from mistakes. But yes, learn from it, don’t repeat it and grow over it are our only obligations. Prosperity and poverty may show two extreme faces. Its prosperity which defines your strength, guts and wisdom but its poverty which tests them.

Even after shutting down many plants and laying off thousands of employee if GM survives and emerge stronger then it would be a real life time accomplishment of Mr Fritz Henderson. I wish him luck...God bless GM.