Strategy: The Delta Between Ford And GM/Chrysler
Now GM has joined Chrysler in what appears to be delayed product development to conserve cash. We wrote about this self-fulfilling prophecy at Chrysler some time ago. So, here we are. Were the government to hand GM and Chrysler money, what would the stipulations be? There will likely be many. From the outside looking in, the most obvious is an imcomplete road map and cohesive business plan at GM and Chrysler. That implies new operational management is necessary to run these organizations. Or, in the case of Chrysler, Cerberus needs to assure the government that they will back away and led the current Chrysler management execute on a strategy aimed at a turnaround as they have really not been given that opportunity to date.
It was inevitable that many in Detroit would wish to return to the status quo by arguing that falling gas prices means they can return to making the same product they made before as highlighted in the article link above. A point missed on the falling gas price debate is the cost of acquisition and ownership. With real wages falling for decades in the U.S., Americans are going to be buying cheaper cars in a tight credit environment. This environment is likely to exist for years to come. When credit does become more readily available, it is not going to be allocated to consumer spending. It will be allocated to production. Those continually wanting to prime the consumer pump are wasting valuable time and effort that should be spent revitalizing what can be primed. GM and Chrysler are not only saddled with cars people don't want but with cars people are unable to afford in this new economic environment. But, then again, so is Toyota, Nissan, BMW, Mercedes, Audi and others. This extends to well beyond working class families to aspirational consumers that have historically leaned towards luxury or demi-luxury brands as noted before.
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