What's wrong with GM?

On Tuesday, GM CEO Rick Wagoner spoke at the company’s 97th annual shareholders meeting and admitted there were some very deep problems at the company. He gave all sorts of reasons for its current situation including the often cited “rising health care issue.” However, most “car guys” will say the chief problem is lack of desireable cars. Most will contend that GM’s current stable of cars are lame and perfect for the rental car companies. If you open any car magazine and look at the 12-18 month roadmap, there aren’t too many from GM, although during the shareholder meeting they insisted there was going to be an avalanche of new car offerings. Plan and simple, they need to get back to basics and build cars that people want. I don’t know how a company as large as GM lost its vision. Take for example, the Saturn car division after 10 years and $10billion invested it has yet to turn a profit. The Pontiac Aztec is just plain junk, anyone who was on that design team should be part of the first wave of layoffs. Lastly, they need to deep six the Buick division, does anyone actually believe that Tiger Woods is driving around in a Buick with his model-wife? The only bright spot is the Cadillac division, it basically was able to change it’s marketing message from “grandma and grandpa” to the “G-Unit” crowd (read: hip-hop culture). In addition, it understands the current horsepower race that is going on between German car companies and is producing high output cars to meet the demands of the market. Another bright spot is the new 6th generation Corvette, it is very slick and can compete with other high output sports cars. Stats:
– GM is the largest private provider of healthcare benefits with 1.1m members (compare that with Kaiser Permanente which has 8.2m members)
– 450k are retired
– $1500 is spent on health care costs per car
– GM factory workers contribute 7% towards health care costs, salaried GM employees contribute 27% and the average American contribution rate is around 32%
– GM spent $5.2b last year on health care, they are on track to spend $5.8b this year