The falling market share of General Motors

by on April 2, 2014 at 3:03 am in History | Permalink

The General Motors market share in the US fell from 62.6% to 19.8% between 1980 and 2009, noticed Susan Helper and Rebecca Henderson. Helper is now the chief economist at the US commerce department, and Henderson is a management professor at Harvard.

The article is by Heidi Moore.  The market here is working, but oh so slowly.  I would like to see behavioral economics papers on why so many people continued to buy General Motors (and here I mean the standard cars) for as long as they did.

Here is a timeline of GM recalls.

1 Insight April 2, 2014 at 3:31 am

Simple answer might be that they were only willing to do so at discounted money-losing prices.

2 Rahul April 2, 2014 at 3:33 am

Misplaced Patriotism might be some (small?) part of it.

My country, right or wrong. My country’s car company, good or bad.

3 Contemplationist April 2, 2014 at 10:51 am

I’ve also encountered anti-Asian prejudice for automobile purchasing decisions. Was surprised at first. It was more of a ‘not a Jap car’ than a ‘Buy American’ decision.

4 Rahul April 2, 2014 at 10:58 am

Is that a WW-2 generation thing? Baby boomers hearing WW2 stories from their parents and stuff.

5 Aaron April 2, 2014 at 5:45 pm

I’ve heard the same thing, supposedly US vehicles used to be high quality and Asian manufacturers were low quality. The trend reversed some time ago but it took a while for the concept to take hold.

6 Massimo April 4, 2014 at 1:00 am

The Pontiac Vibe (GM) and the Toyota Matrix were mechanically identical cars literally built in the same factory. That makes a nice controlled test if you want to see a buyer’s brand bias.

7 londenio April 2, 2014 at 3:39 am

Insufficient expertise to judge quality and performance. This leads to relying too much on brand, habit and nostalgia.

8 prior_approval April 2, 2014 at 4:50 am

‘The General Motors market share in the US fell from 62.6% to 19.8% between 1980 and 2009’

It is likely a bit more dramatic than that – after all, the GM of the 1980s built trucks. Until selling the division to Volvo in 1988.

9 Ted Craig April 2, 2014 at 6:41 am

These figures do not include heavy-duty trucks.

10 prior_approval April 2, 2014 at 10:17 am

Exactly – which is why GM’s shrinking is underrepresented even by such clear numbers of continued failure to maintain a pre-eminent position in the U.S. market. Because their heavy and medium truck market share went to zero – and has stayed there for almost a generation.

11 Ted Craig April 2, 2014 at 10:53 am

GM remains in the medium-duty business.

12 Ted Craig April 2, 2014 at 10:57 am

No wait, I stand corrected. I forgot they left that market in ’09. But it wasn’t part of the Volvo deal. They sold that to Navistar.

13 ChrisA April 2, 2014 at 5:14 am

GM’s light trucks and overseas vehicles (Opel) were not actually too bad. It seemed like that their car business in the US was being kept afloat by their willingness to offer deep discounts to the car hire firms. 70% of their Chevrolet Impala for instance goes to car hire firms (http://features.blogs.fortune.cnn.com/2013/03/14/can-general-motors-remake-its-rental-car/). The car hire firms didn’t mind the very steep depreciation versus list price, because they paid significantly less than the list price. The car hire firms do not also care too much about the maintenance costs, as they only have the cars for short period, or the deeply unfashionable nature of the GM brands (practically everyone chooses a car rental on price). The eventual buyers, after the car hire firms are finished with the cars, are usually poor people buying on credit, upfront costs are thus minimized versus ongoing maintenance. GM could offer steep discounts for car hire firms of course by skimping on design, brand equity investment and going for very high volume. Which is a different strategy to, say BMW, but not necessarily a bad one.

14 mulp April 2, 2014 at 11:44 am

GM was a bank that provided free cars with its loans and leases.

15 p ed April 2, 2014 at 12:52 pm

+1

16 JWatts April 2, 2014 at 3:58 pm

GM was a profitable financing company attached to an unprofitable car company for a very long time.

17 Just Another MR Commodore April 2, 2014 at 5:54 am

Of course if Americans had any sense they would be driving a good, reliable Packard

18 prior_approval April 2, 2014 at 6:04 am

‘And you knew where you were then.
Girls were girls and men were men.
Mister, we could use a man like Herbert Hoover again.

Didn’t need no welfare state.
Everybody pulled his weight.
Gee, our old LaSalle ran great.
Those were the days!’

All In The Family theme song lyrics

Four decades on, and the only thing that needs to be changed is replacing LaSalle with GM. Though it should be noted that LaSalle was a GM brand – http://en.wikipedia.org/wiki/LaSalle_(automobile)

19 Just Another MR Commodore April 2, 2014 at 7:25 am

I can’t relate to references coming out of such low-brow “entertainment”.

20 Just Another MR Commodore April 2, 2014 at 7:28 am

La-Salle? Never heard of it. probably some sort of Pierce-Arrow contraption.

21 andrew' April 2, 2014 at 5:59 am

They filled the trunks full of bananas.

Thus the phrase “peel out.”

22 Yancey Ward April 2, 2014 at 10:44 am

Yeah, another market failure.

23 Jan April 2, 2014 at 6:33 am

I think there is too much conflicting information out there for the average buyer to say, “ok, I’m done with GM.”

For example, in 2013 GM was ranked #1 in quality for the first time ever: http://money.cnn.com/2013/06/19/autos/jd-power-gm/

As for the list of recalls, there are always tons of them for all manufacturers. Here is Toyota’s recall list for 2009-2011: http://money.cnn.com/2013/06/19/autos/jd-power-gm/

24 Jan April 2, 2014 at 6:33 am
25 KPres April 3, 2014 at 4:56 pm

Ummm….no.

“GM Leads Pack in Recalled Car Models”…..http://time.com/45235/gm-recall-model-interactive/

Toyota did have a lot of recalls starting in 2009, though. Interesting timing, to say the least.

26 Ted Craig April 2, 2014 at 6:42 am

Quality plays a much lesser factor in the average car buying decision than you would assume.

27 Ted Craig April 2, 2014 at 7:08 am

Other reasons:
1. Brand loyalty, as stated above, and patriotism to a degree. This kept people from buying not only imports, but Fords and Chryslers, as well.
2. Fleet sales, as stated above. This is the most misunderstood aspect of auto sales. Everybody assumes all vehicles are sold to individuals, while in reality many are sold to corporations.
3. Light-duty trucks, an area in which GM remains a leader.
4. The dealer network, which was unfairly maligned during GM’s restructuring.
5. Import restrictions.

28 Skip Intro April 2, 2014 at 8:42 am

+1

29 Albigensian April 2, 2014 at 2:37 pm

“Quality plays a much lesser factor in the average car buying decision than you would assume.”

Well, that’s the assumption- buyers want ‘hot’ styling, and lots of features. And if that doesn’t work, a rebate.

Yet Toyota sells a zillion Camrys every year, even though it’s about the plainest looking car on the road. And no rebates.

I don’t know why so many Americans buy Camrys, but I’d guess that perceived reliability and durability might be major factors (no, I’ve never owned one).

GM once had a reputation for quality- its cars might have been perceived as plain then, but they’d keep running even when they received minimal maintenance (which was often all they got).

Perhaps GM (and Ford) would be more competitive if top management understood that although buyers care about styling and features, none of that matters if the machine won’t reliably perform its primary function of transportation. Even though there’s no short-term payback here: it takes a long, long time before buyer perception changes about something as basic as reliability and durability.

And, yes, I’ve had US-brand vehicles that lasted a long time and were quite reliable: but just because it sometimes happens does not mean it has become the rule and not the exception.

30 chuck martel April 2, 2014 at 4:16 pm

There’s lots of reasons why a particular customer buys a particular car but a big one is what it says about them, they’re making a statement when they sign the paperwork. A Camry buyer considers himself a practical, economical, logical person and wants others to know it. The guy that leaves the lot in a Camaro is telling the world that he needs fairly normal transportation but wants to show his wild side. The Buick driver doesn’t care about ostentation, he needs quality. The Mercedes-Benz owner wears his Rolex when he gets behind the wheel.

31 gcruse April 2, 2014 at 7:59 pm

Over thirty years ago. US automakers lobbied Congress to place import restrictions on foreign cars, which they did. On the news, GM paid their executives huge bonuses and jacked up the price of GM cars in the US. I swore on that day to never buy another GM product. And I never did.

32 Dan Weber April 2, 2014 at 7:00 am

Pure number of recalls is a lousy measure. Sometimes cars are recalled for non-life-threatening issues — you take them to the dealership, the dealership applies the fix (and doesn’t charge you anything for it, but sometimes they try to), and you drive away.

And the falling market share number always bugged me as a too-simple summary of the story. The car industry has minimal lock-in for consumers. When new entrants show up, they will grab some of the market share. There are only 100 percentage points of market share to go around. Losing market share isn’t necessarily an indication you suck.

33 Z April 2, 2014 at 7:26 am

My current vehicle had a recall for tires a month after I bought it. A year after that it had a recall for the plastic cover on the seatbelt. It supposedly faded to the wrong color over time. This is not uncommon. part of of is predatory litigation, but some of it is just a misplaced commitment to quality. Maybe some people will end up with a negative view of Brand X if the seat belt fades in color after two years, but I doubt it would be a widespread complaint.

34 CD April 2, 2014 at 12:16 pm

Agreed that recalls are noisy indicators.

But at any time over the last 20 years, if you took ten minutes to look up reliability and safety ratings, you would cross GM off your list.

35 Claudia April 2, 2014 at 7:23 am

blame it on parents. here’s research from a multigenerational panel data set that finds: “adult children are 46% more likely to choose an automobile brand if their parents also chose that brand” http://www-personal.umich.edu/~kelloggr/psidbrands-draft_130628.pdf preferences have to form somehow, not surprising to me that there is an intergenerational (and thus slowly evolving) aspect to preferences about such a durable good.

36 PD Shaw April 2, 2014 at 9:16 am

I prefer not to buy autos, whose manufacturers turn up in World War II documentaries; something I certainly carried from a veteran-grandparent I knew, but whom my children will not.

37 Aaron April 2, 2014 at 7:09 pm

I wonder how well that’s correlated to urbanization, my experience is that some people have strong connections to certain car brands and it correlates to the degree they find cars necessary.

In small towns a vehicle is far more critical and an emotional connection will be stronger. In cities with transit systems a car is less critical so the emotional connection and brand stability should decrease.

38 Komori April 3, 2014 at 10:03 am

My first car was a Ford, because that’s what my parents drove and they picked it out for me because I didn’t know much about cars.

Later, when I replaced it, I bought a Honda, because I was sick of dealing with the maintenance issues on the Ford, and had time to do my research (which panned out; never had anything but scheduled maintenance on the Honda for the 10 years I owned it).

Now my parents drive Honda…

39 Z April 2, 2014 at 7:31 am

Men outside the hipster enclaves have a great deal of loyalty to car brands. I’m sure the cosmopolitan types who read this blog find that amazing, but it is true. Out here with the prols, you often hear men say they are “a chevy guy” or a “Ford guy.” I have a friend who was a Saab guy until they went broke. Now he is a BMW guy.

Despite the attempts to blend every bit of the culture into a gray slurry, people retain their own tastes in things. A lot of people like how a GM vehicle looks and feels. There are people who love the traditional styling of certain Chrysler products. It’s not my thing, but that’s diversity for ya.

40 Adrian Ratnapala April 2, 2014 at 9:02 am

But against that, there is the fact that a car is a an important thing, worth being rational about. Personally I’m very much a “Ford Guy”. Because my grandfarther and father were before me. But I drove a Nissan because in the size/price range I was looking for they had the best offer. Cars are too expensive to worry about team spirit.

But I still cheer for Ford end enjoy a fair bit of Schadenfreude at GM’s Problems.

41 Z April 2, 2014 at 11:11 am

The quantifiable differences between the brands are negligible these days, when you adjust for price. That leaves weird cultural habits, tradition, taste and so forth. Location of the dealer is a big factor. I recall reading something on that a long time ago. A GM dealer near a working class area could very well lead to lower sales into the middle and upper classes, simple because the locals associate GM with the downscale.

42 CD April 2, 2014 at 12:19 pm

“The quantifiable differences between the brands are negligible these days, when you adjust for price.”

Obviously false — is that really what you meant to write?

43 Z April 2, 2014 at 1:48 pm

Is English your second language?

44 JWatts April 2, 2014 at 4:08 pm

“Obviously false — is that really what you meant to write? ”

I don’t see why that’s “obviously” false. When shopping for used vehicles in the $10-20K, the price of the vehicle is generally highly correlated with it’s average quality rating. Used Toyota’s are reliable but pricey, used GM cars are much cheaper but get much worse reliability ratings.

And it’s important to keep in mind that GM reliability of today is on par with Toyota reliability of 15 years ago. All the car companies are improving.

45 Zach April 2, 2014 at 8:30 am

GM sold atrocious vehicles for a long time but their current product line is high-quality, competitive, and profitable. Ford is a similar story. Toyota, Honda, and Nissan have largely stagnated by comparison. Volkswagen is actively trying to become GM.

I find it very aggravating that many right-of-center types seem to be outright eager for the American car companies to fail. Mood affiliation, anyone?

46 Z April 2, 2014 at 8:57 am

This looks more like projection. Your cult has been leading the charge against American brands for decades. Right-of-center types are the customer base for American car companies.

47 chuck martel April 2, 2014 at 9:00 am

The left-of-center types were the first ones to get into foreign cars. If you wanted to look at a new Volkswagen in 1965 the easiest place to get a glimpse of one would have been on a college campus.

There’s been a lot of popular animosity toward GM going way back and much of it was due to their miserable warranty service. The Japanese manufacturers exploited that failing and it had a significant effect on their US success.

48 mulp April 2, 2014 at 11:41 am

By “left of center” you mean environmentalists and the working poor who did not want to be tied down by debt for a car.

Conservatives have long loved pillage and plunder products – the faster Louisiana is destroyed the better. The more air pollution in Texas the better. That’s why Texas is better than California – Californians won’t embrace the killer smogs as a great virtue.

But hey, China is better than Texas. They love Buick and know no limits to the amount of smog that they will embrace.

49 Z April 2, 2014 at 11:46 am

No, he means foaming at the mouth loonies from the Cult who post rants about Texas and mythical beasts called “conservatives.”

50 zbicyclist April 2, 2014 at 9:07 am

…”sold atrocious vehicles for a long time but their current product line is high-quality…”

If you look an any American carmaker apologist from the 1970s on, you hear this same statement. Basically we have 40 years of saying “we’ve reformed”. Maybe it’s true now, maybe it isn’t.

51 Mark Thorson April 2, 2014 at 10:44 am

It’s those Detroit vehicles of the 1970’s and 1980’s that turned me off American cars for a lifetime. Did they get better? I’ll never know.

52 Urstoff April 2, 2014 at 9:51 am

In contrast, Chrysler is still terrible.

53 Eric April 2, 2014 at 8:51 am

I realize the article was about cars but I buy about 10 pickup trucks each year for our company and have found the GM trucks to be a great value. We have had fewer repairs and lower costs per mile with GM than either Dodge or Toyota. We have never purchased Fords because we can’t obtain the same kind of pricing we can on the other makes. Also, GM has the highest fuel economy in the class for 1/2 tons.

54 charlie April 2, 2014 at 10:01 am

What is a “standard car” ?

55 Bill April 2, 2014 at 8:58 pm

They keep it in a bell jar in Paris.

56 Yancey Ward April 2, 2014 at 10:55 am

I am of the same opinion as Ted Craig- quality probably isn’t high on the list of most American car buyers, and that explains the inertia a lot of car buyers have for buying GM over the decades. I have driven Fords, GMs, Hondas, and Toyota’s during my lifetime, and the foreign brands win hands down over the long run, but in the showroom, they all impressed. As for GM’s recent accolades for quality, I just don’t believe it because of the company’s political entanglements of the last 5 years with the current administration.

57 Z April 2, 2014 at 11:15 am

Feeling the patriotic tug, I walked into a GM dealer a few years ago looking to trade in my vehicle. The sales people were unpleasant. The test drive ended with the vehicle dying on the side of the road. It was only a half mile from the lot so I hoofed it back and decided patriotism is not all its cracked up to be.

I’ve drive all sorts of cars and GM stands out to me as the poorest quality of them all. Maybe 20 years from now when I feel that tug again, they will be better.

58 The Engineer April 2, 2014 at 11:39 am

I’ve got a 2012 Buick Regal, and it is by far the most reliable, well built car I’ve ever owned. I’ve had Honda Accords, Civics, and an Acura Integra, as well as a BMW X5. It’s a very solid vehicle (literally, my only complaint is that it is so heavy, not unlike the BMW in that regard).

Now, my wife’s 2010 Chrysler Town and Country van is a piece of junk. Cerebus really screwed up Chrysler.

59 Yancey Ward April 2, 2014 at 12:40 pm

I’ve got a 2012 Buick Regal, and it is by far the most reliable, well built car I’ve ever owned.

Well, I can grant you the the “well built” on owning a car for 2-3 years, but not the reliability. Not yet.

60 The Engineer April 2, 2014 at 2:57 pm

I don’t know about that. The car has never been to the dealer for any reason other than an oil change. That’s reliability. Not so much as a squeak out of the chassis, which in Chicago this winter is really saying something.

61 Rahul April 2, 2014 at 1:51 pm

A showroom test drive vehicle dying by the side of the road sounds mighty odd. One would think they’d put their best foot forward there?

62 Z April 2, 2014 at 6:52 pm

It was probably nothing major, but it was funny. What made it even more comical is the sales guy weighed in at 400+ so the half mile walk back was like the Bataan Death March for him.

63 mulp April 2, 2014 at 11:30 am

“I would like to see behavioral economics papers on why so many people continued to buy General Motors (and here I mean the standard cars) for as long as they did.”

Well, to start, Honda, Nissan, Toyota, VW, Kia, et al refused to pay its customers to buy them by giving their customers jobs building, selling, maintaining their cars.

I know economists since Reagan believe in the free lunch of workers not being consumers and consumers not being workers, and that if the 1% gets richer, then the 99% will borrow and spend a lot more to make the rich richer – the wealth effect. But TANSTAAFL.

Since 1980, not only government debt, but private debt has exploded as Wall Street has demanded higher profits by lower wages and higher prices with Wall Street getting a cut of the debt that pays for the profits.

GM was a bank that gave cars away with its lending.

And conservatives thought Regulation Q was bad because banks gave away toasters to new customers opening a savings account, and that by freeing the banks customers would profit from higher interest and more free services. Instead we got GMAC and GE Capital plus all the other banks that owned factories.

64 TMC April 2, 2014 at 11:43 am

Babble much?

65 Ted Craig April 2, 2014 at 12:36 pm

You do realize those companies do have people selling their cars, right? You don’t phone Japan or Korea to place your order. They are also maintained in the U.S. And, of course, all those companies do build cars here.

66 The Engineer April 2, 2014 at 11:33 am

For those who don’t understand brand loyalty to GM (or Ford, or Chrysler), think about how guys feel about their pickup trucks today. That EXACT kind of loyalty was on display with GM and their full size vehicles back in the 50’s, 60’s, and ’70’s.

Arguably, had the energy crisis never happened, and the full size car not been killed by CAFE standards, the Japanese would never have gotten a foothold in the US, and our auto market would look a lot more like what it did in the 1970’s.

67 Steve-O April 2, 2014 at 12:35 pm

Exactly. GE’s competency is in building large vehicles. But CAFE standards are on a fleet basis, which disadvantages companies that excel making large (i.e., low fuel efficiency) vehicles relative to those who excel making smaller, high-efficiency vehicles. GM has to sell a bunch of small cars to meet CAFE standards, when it would be better off not making them in the first place.

68 Charles D April 2, 2014 at 11:36 am

I buy domestic, because I like it when my knees fit under the steering wheel (I’m 6’4), so I go full-size. When people talk about their foreign cars that last for 75,000,000 miles or whatever, they’re talking about a Toyota Camry, not a Toyota Avalon. Also, IME, domestic cars tend to “feel” sturdier and more comfortable — in terms of the construction of the seats, the panels, etc. When I ride in a foreign car, I get the feeling that I’m going to break something by fidgeting — I don’t tend to get that feeling from domestic cars (although, I do often get the “I’m going to break something” feeling from more eccentric domestic offerings that are clearly trying to appeal to younger people — the feel of their construction is clearly trying to mimic the kinds of foreign cars that young people like.)

This all detracts from fuel economy, I’m sure, and it probably puts more wear and tear on the engine. But, I enjoy driving the car more while I have it, so I’m on a personal efficiency frontier.

69 anon April 2, 2014 at 11:50 am

Yeah, seats and space are two quality reasons to stay American. I’m an athletic guy, and not huge, but I don’t feel comfortable in a car designed for a 150 pound 5 foot 6 guy. I’ve owned fancy German brands for a while (and by most measures they are superior products) but I still miss the cabin of the American pickup I had years ago.

I also lament the demise of the Crown Vic in the taxi business each time I cram into the microscopic back seat of a Prius or an Escape, which were never designed to accommodate adults.

70 The Engineer April 2, 2014 at 11:53 am

One of the reasons I stopped buying Honda’s is because their doors are so lightweight. The metal is really thin, in fact somebody sat on the hood of my Honda Civic and left two “bun marks” in the hood.

That’s great for fuel economy, not so great for other things. Honda’s used to have higher insurance premiums because they sustained more damage in crashes because of the thin metal.

If you want a car built like a vault, you should go German. You could kill a man with the door of my BMW X5. My wife hated it because the doors were so heavy.

71 anon April 2, 2014 at 12:06 pm

My 100 pound grandmother tripped and fell against the door of my mother’s CRV leaving a substantial dent. Those doors were less thin sheet and more thick foil.

I’m pretty sure the doors on my Benz would stop bullets.

72 chuck martel April 2, 2014 at 1:21 pm

A few years back I saw 2 guys in a Volkswagen get hit broadside by a full-size Ford. They both died instantly. If they’d have been in a real car they’d probably still be around. They were both chemistry majors in grad school. I turned down rides in compact cars from then on.

73 The Engineer April 2, 2014 at 2:56 pm

It’s a fact that in the IIHS crash testing, none of the subcompact cars did very well. And that’s in a crash that is no worse than one subcompact hitting another.

74 anon April 2, 2014 at 3:25 pm

This report is interesting reading:

http://www.iihs.org/externaldata/srdata/docs/sr4605.pdf

The takeaway is buy large, buy something recent, favor SUVs over cars, and buy something expensive. I don’t see an obvious trend by country of origin.

Though the Cobalt, in the press recently, is the fourth highest death rate vehicle on the list.

75 Joe Smith April 2, 2014 at 11:44 am

I loved my Chevy Camaro and my Buick Century. Although admittedly I now love my Subaru Forester more than I loved the Buick.

76 KLO April 2, 2014 at 7:22 pm

The US car market has always been quite different from other car markets. People here prefer large vehicles, particularly trucks, over other types of vehicles. Thus, foreign competitors were at a disadvantage. They either had to develop all new cars exclusively for the US market or target customers with tastes that differed from the typical American. The former strategy is risky and expensive and the latter limits your marketshare.

In practice, what most foreign brands did was appeal to customers outside of the American mainstream with existing products sold overseas. After they established themselves, the foreign brands increased the vehicle model’s size incrementally with each redesign to appeal to an ever larger portion of the American market redesign. Trying to do anything else resulted in failures like Toyota’s T100.

The truth is that, as unreliable as their products were, American manufacturers did make better large cars and trucks than their foreign competitors. Because successfully manufacturing and marketing large cars and trucks is a complex, risky endeavor, it took the foreign competition a long time to catch up.

77 Bob April 3, 2014 at 12:55 am

Brand images and product loyaltly are created a young age. The average age of GM puchasers rose as maarket share declined to the point where Cadillac buyers had an average of 70+.

Examples today of products suffering the same fate are print newspapers and television news. If you happened to catch a network nightly newscast observe how many of the ads are from phramaceutical companies.

78 mike smitka April 3, 2014 at 8:25 am

Off to the Automotive News PACE supplier award ceremony Monday evening in Detroit – Sue Helper is a fellow judge. For you academics, I’ll also present a paper on auto suppliers and innovation at the Industry Association in late May.

First, before (or rather than) venting, read Sue Helper & Rebecca Henderson’s paper. Second, read my blog – I’ve many posts tracing the history of the domestic US industry. Let me focus on their paper, as Tyler says little on the content. They note in their paper, without using the formal dominant firm / fringe entry jargon of industrial organization, a tight oligopoly invites entry; when you’re dominant you don’t gain from fighting. That was accentuated by the route of entry, imports of small cars, because that’s a niche market – too small a volume to repay an investment by the Detroit Three. (The initial response was thus sensible: import cars yourself, with GM, Ford and Chrysler setting up import deals respectively with Isuzu, Mazda and Mitsubishi.) Then they emphasize the awkward organizational structure of GM; the best treatment I think is Maryann Keller’s 1989 book, Rude Awakening. I would add a factor they don’t consider, CAFE (corporate average fuel economy) that made it hard to offer high horsepower in a car, but allowing it in minivans and light trucks. In an era of cheap gasoline, the Detroit Three appropriately moved in that direction. Their cars suffered from that. Finally, the authors note poor relational contracting with suppliers. Implicit is that suppliers are increasingly the repository of new technology and engineeering manpower. That however has finally changed, as in visits to suppliers as judges to the PACE competition we now observe GM partnering with suppliers to bring new technology to the market on par with their competition. Would that that had happened 15 or even 10 years ago.

Let me add a coda: I just purchased a Chevy Cruze manual transmission Eco, because on a variety of criteria I found it the best car for my needs. My wife and I find the interior acceptable – most are too gaudy / noisy / cheap for us to contemplate looking at year after year. The seat is fine, not true of all the competition. It drives well, again not true of all the competition. The price was OK. It had a back seat (my wife nixed a used Porsche Boxster, my first choice, and other cars that wouldn’t make it easy to fit in the car seat of a new granddaughter). It gets good gas mileage; I’m averaging 35 mpg going up and down the mountain ridge on which I live. Buying American was not a factor in the decision, we started out looking at imports [Toyota ranked bottom among all the vehicles we looked at] and also Ford. And while I may get a recall notice any day now, I would expect ANY vehicle I purchased to be recalled at least one time.

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