Saturday, April 09, 2005

GM Pulls LA Times Ads After Bad Review

I don't mean to turn this blog into a running commentary on the auto industry, but given that's one of the largest world consumers of oil products, it's not a surprise that I keep coming back to it. General Motors has pulled all ads from the Los Angeles Times after new auto columnist Dan Neil declared the new Pontiac G6 "a sales flop" in an April 6 article. Neil's column, titled "An American Idle", is a litany of what's wrong with a GM in which things continuously go from bad to worse. Subtitled "The Pontiac G6 is a sales flop. At General Motors, let the impeachment proceedings begin", he calls for the head of Bob Lutz (already accomplished earlier in the week):
In his 3 1/2 -year tenure, GM has lost something like 3 percentage points of market share. I was about to make the case that, given GM's current China syndrome -- North American market share dropping to its lowest point in decades, and market analysts, sensing no real momentum for reform within the company, downgrading the company's bond ratings to near-junk status -- someone's head ought to roll, and the most likely candidate would be the numinous white noggin of Lutz.
GM claims to be in uproar about his comments about the G6:
Honestly, it takes some sort of perverse genius to make the Grand Am, the car the Pontiac G6 replaces, look like a showroom winner, but the G6 is selling at about half the volume of the unloved and unlovely Grand Am, which dates to the 1980s. Even a multimillion-dollar giveaway of G6s on "Oprah" in September wasn't enough to fire up sales of this car.
But the real winner, the true reason for this tantrum, might be his demand that Lutz's successor at North American operations, Robert Wagoner, should get the axe, too:
... given recent events, I have to revise my story. To wit: Dump Wagoner.

It was Lutz, after all, who candidly averred at a Morgan Stanley meeting last month that GM might have to phase out some of its product lines, even using the word "damaged" to describe Pontiac and Buick. In the ensuing furor, Lutz claimed his remarks were taken out of context and over-hyped by the sensationalist media, like that scandal rag Automotive News.

Wagoner memo to Lutz: Stop making sense.

Pulling it all together, Neil concludes that the bland G6 and current management are of a piece, and both need to go:
[The G6] is an uncompetitive product, an assertion borne out not by my say-so but by sales numbers. When ballclubs have losing records, players and coaches and managers get their walking papers.

At GM, it's time to sweep the dugout.

GM may wish to hide from such bad press, but it can't, not when it's lost 3.5% market share during Lutz's tenure. Moreover, I'd be willing to bet that GM has lost even more points in the critical California market. Worse still, from GM's point of view, this embargo can't really last; the Times represents a market GM can't ignore. Whether they actively fix their product offerings to reflect sensibilities in the second half of the age of oil is another matter.