Tuesday, July 25, 2006
A few days ago, I purchased a brand new 2006 (as opposed to a 2007) Opel Astra.
A few days ago, I purchased a car from General Motors.
I like this car.
Kind of a shocker right? An American buying American? Well it's not really an American car. It uses a lot of American parts, but final assembly is in Belgium, and a lot of the engineering and design came from Germany. But Opel has been part of the GM empire since 1929. The car may be German, but the profits go back to Detroit for every one sold.
GM can make quality cars. I drive one. The Opel Astra is a best seller throughout Europe, it has largely seen positive reviews from the automotive press, and is a great alternative to the VW Golf.
And yet GM is screwing it up. Here in Dubai, they don't sell Opels. Instead the Opel dealership is in the neighbouring emirate of Sharjah. That's why in Dubai you rarely see Opels. Instead in Europe they are ubiquitous. Here they are a rarity.
Seeing a car here that is of such high quality being produced by General Motors, yet not sold in that company's largest market, America, showcases the myriad problems GM faces.
How is it that the German arm of GM can make great cars, yet the American arm, which is far larger and houses the entire conglomerate's headquarters, is virtually incapable of producing a quality small car? Why?
I think the answer lies in organization. I don't think Germans make better cars than Americans because they are German. I think they make better cars because their companies and bureaucracies are smaller. Holden of Australia, Opel of Germany make great vehicles people want. GM of America doesn't. Volvo, a Swedish subsidiary of Ford, makes great cars people want, Ford of America doesn't. Ford's smaller semi-independent European arm does well too.
The point is that the problems GM faces are due not to an American "cultural" issue, as many claim. They are due to the fact that the company is too big. It is too bulky to make good decisions. Committees rule the day there.
Look at Toyota. Toyota is quickly becoming the GM of Japan. In America the company now has three marques, Scion, Toyota, and Lexus. Their cars aren't of the same class leading quality they once were. They've just delayed the new Toyota Corolla. This isn't a perfect company anymore because it's just too big. It won't shrink any time soon, but it won't stay on top forever. Not now, but maybe in 20 years, a clever Chinese car company will come around and beat it. Or maybe Korean. We are seeing the cracks in the surface, and they are because of imperial overstretch. What happened to GM is now happening to Toyota. But it will take decades, literally decades for Toyota's momentum to stop. However, it already has for GM.
So GM needs to shrink. It needs to collapse a little bit. Not just in terms of laying off the factory worker, he or she doesn't make design decisions, transmission decisions, no what they need to do is get rid of the numerous copycat sedans they sell. There shouldn't be an Impala or a Malibu being sold against Toyota's one vehicle, the Camry, for that market segment. They should combine the two vehicles, and give more freedom to the design team. Be daring. Make cars that are exciting. Otherwise we won't buy any of them.